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NOTE 1 THE COMPANY
Newmont Mining Corporation and its affiliates and subsidiaries (collectively, “Newmont” or the “Company”) predominantly operates in the mining industry, focused on the exploration for and production of gold and copper. The Company has significant assets in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico. The cash flow and profitability of the Company's operations are significantly affected by the market price of gold, and to a lesser extent, copper. The prices of gold and copper are affected by numerous factors beyond the Company's control.
References to “A$” refers to Australian currency, “C$” to Canadian currency, “NZ$” to New Zealand currency, “IDR” to Indonesian currency and “$” to United States currency.
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NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The Company's Consolidated Financial Statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). The preparation of the Company's Consolidated Financial Statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to mineral reserves that are the basis for future cash flow estimates utilized in impairment calculations and units-of-production amortization calculations; environmental, reclamation and closure obligations; estimates of recoverable gold and other minerals in stockpile and leach pad inventories; estimates of fair value for certain reporting units and asset impairments (including impairments of goodwill, long-lived assets and investments); write-downs of inventory, stockpiles and ore on leach pads to net realizable value; post-employment, post-retirement and other employee benefit liabilities; valuation allowances for deferred tax assets; reserves for contingencies and litigation; and the fair value and accounting treatment of financial instruments including marketable securities and derivative instruments. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of Newmont Mining Corporation and more-than-50%-owned subsidiaries that it controls and entities over which control is achieved through means other than voting rights. The Company also includes its pro-rata share of assets, liabilities and operations for unincorporated joint ventures in which it has an interest. All significant intercompany balances and transactions have been eliminated. The functional currency for the majority of the Company's operations, including the Australian operations, is the U.S. dollar.
The Company follows FASB Accounting Standards Codification (“ASC”) guidance for identification and reporting of entities over which control is achieved through means other than voting rights. The guidance defines such entities as Variable Interest Entities (“VIEs”). Newmont identified the Nusa Tenggara Partnership (“NTP”), a partnership between Newmont and an affiliate of Sumitomo, that owns a 56% interest in PT Newmont Nusa Tenggara (“PTNNT” or “Batu Hijau”), as a VIE due to certain capital structures and contractual relationships. Newmont also identified PT Pukuafu Indah (“PTPI”) and PT Indonesia Masbaga Investama (“PTIMI”), unrelated noncontrolling partners of PTNNT, as VIEs. Newmont entered into transactions with PTPI and PTIMI, whereby the Company agreed to advance certain funds in exchange for a pledge of the noncontrolling partners' combined 20% share of PTNNT dividends, net of withholding tax. The agreements also provide Newmont with certain voting rights and obligations related to the noncontrolling partners' combined 20% share of PTNNT and commitments from PTPI and PTIMI to support the application of Newmont's standards to the operation of the Batu Hijau mine. The Company has determined itself to be the primary beneficiary of these entities and controls the operations of Batu Hijau, and therefore consolidates PTNNT in the Company's financial statements.
Cash and Cash Equivalents
Cash and cash equivalents consist of all cash balances and highly liquid investments with an original maturity of three months or less. Because of the short maturity of these investments, the carrying amounts approximate their fair value. Cash and cash equivalents are invested in United States Treasury securities and money market securities. Restricted cash is excluded from cash and cash equivalents and is included in other current and long-term assets.
Investments
Management determines the appropriate classification of its investments in equity securities at the time of purchase and reevaluates such determinations at each reporting date. Investments in incorporated entities in which the Company's ownership is greater than 20% and less than 50%, or which the Company does not control through majority ownership or means other than voting rights, are accounted for by the equity method and are included in long-term assets. The Company accounts for its equity security investments as available for sale securities in accordance with ASC guidance on accounting for certain investments in debt and equity securities. The Company periodically evaluates whether declines in fair values of its investments below the Company's carrying value are other-than-temporary in accordance with guidance for the meaning of other-than-temporary impairment and its application to certain investments. The Company's policy is to generally treat a decline in the investment's quoted market value that has lasted continuously for more than six months as an other-than-temporary decline in value. The Company also monitors its investments for events or changes in circumstances that have occurred that may have a significant adverse effect on the fair value of the investment and evaluates qualitative and quantitative factors regarding the severity and duration of the unrealized loss and the Company's ability to hold the investment until a forecasted recovery occurs to determine if the decline in value of an investment is other-than-temporary. Declines in fair value below the Company's carrying value deemed to be other-than-temporary are charged to earnings. Additional information concerning the Company's equity method and security investments is included in Note 18.
Stockpiles, Ore on Leach Pads and Inventories
As described below, costs that are incurred in or benefit the productive process are accumulated as stockpiles, ore on leach pads and inventories. Stockpiles, ore on leach pads and inventories are carried at the lower of average cost or net realizable value. Net realizable value represents the estimated future sales price of the product based on current and long-term metals prices, less the estimated costs to complete production and bring the product to sale. Write-downs of stockpiles, ore on leach pads and inventories, resulting from net realizable value impairments, are reported as a component of Costs applicable to sales. The current portion of stockpiles, ore on leach pads and inventories is determined based on the expected amounts to be processed within the next 12 months. Stockpiles, ore on leach pads and inventories not expected to be processed within the next 12 months are classified as long-term. The major classifications are as follows:
Stockpiles
Stockpiles represent ore that has been extracted from the mine and is available for further processing. Stockpiles are measured by estimating the number of tons added and removed from the stockpile, the number of contained ounces or pounds (based on assay data) and the estimated metallurgical recovery rates (based on the expected processing method). Stockpile ore tonnages are verified by periodic surveys. Costs are allocated to stockpiles based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the ore, including applicable overhead and amortization relating to mining operations, and removed at each stockpile's average cost per recoverable unit.
Ore on Leach Pads
The recovery of gold from certain gold oxide ores is achieved through the heap leaching process. Under this method, oxide ore is placed on leach pads where it is treated with a chemical solution, which dissolves the gold contained in the ore. The resulting gold-bearing solution is further processed in a plant where the gold is recovered. Costs are added to ore on leach pads based on current mining costs, including applicable amortization relating to mining operations. Costs are removed from ore on leach pads as ounces are recovered based on the average cost per estimated recoverable ounce of gold on the leach pad.
The estimates of recoverable gold on the leach pads are calculated from the quantities of ore placed on the leach pads (measured tons added to the leach pads), the grade of ore placed on the leach pads (based on assay data) and a recovery percentage (based on ore type). In general, leach pads recover between 50% and 95% of the recoverable ounces in the first year of leaching, declining each year thereafter until the leaching process is complete.
Although the quantities of recoverable gold placed on the leach pads are reconciled by comparing the grades of ore placed on pads to the quantities of gold actually recovered (metallurgical balancing), the nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, the metallurgical balancing process is constantly monitored and estimates are refined based on actual results over time. Historically, the Company's operating results have not been materially impacted by variations between the estimated and actual recoverable quantities of gold on its leach pads. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis.
In-process Inventory
In-process inventories represent materials that are currently in the process of being converted to a saleable product. Conversion processes vary depending on the nature of the ore and the specific processing facility, but include mill in-circuit, leach in-circuit, flotation and column cells, and carbon in-pulp inventories. In-process material is measured based on assays of the material fed into the process and the projected recoveries of the respective plants. In-process inventories are valued at the average cost of the material fed into the process attributable to the source material coming from the mines, stockpiles and/or leach pads plus the in-process conversion costs, including applicable amortization relating to the process facilities incurred to that point in the process.
Precious Metals Inventory
Precious metals inventories include gold doré and/or gold bullion. Precious metals that result from the Company's mining and processing activities are valued at the average cost of the respective in-process inventories incurred prior to the refining process, plus applicable refining costs.
Concentrate Inventory
Concentrate inventories represent copper and gold concentrate available for shipment. The Company values concentrate inventory at the average cost, including an allocable portion of support costs and amortization. Costs are added and removed to the concentrate inventory based on tons of concentrate and are valued at the lower of average cost or net realizable value.
Materials and Supplies
Materials and supplies are valued at the lower of average cost or net realizable value. Cost includes applicable taxes and freight.
Property, Plant and Mine Development
Facilities and equipment
Expenditures for new facilities or equipment and expenditures that extend the useful lives of existing facilities or equipment are capitalized and recorded at cost. The facilities and equipment are amortized using the straight-line method at rates sufficient to amortize such costs over the estimated productive lives, which do not exceed the related estimated mine lives, of such facilities based on proven and probable reserves.
Mine Development
Mine development costs include engineering and metallurgical studies, drilling and other related costs to delineate an ore body, the removal of overburden to initially expose an ore body at open pit surface mines and the building of access ways, shafts, lateral access, drifts, ramps and other infrastructure at underground mines. Costs incurred before mineralization are classified as proven and probable reserves are expensed and classified as Exploration or Advanced projects, research and development expense. Capitalization of mine development project costs, that meet the definition of an asset, begins once mineralization is classified as proven and probable reserves.
Drilling and related costs are capitalized for an ore body where proven and probable reserves exist and the activities are directed at obtaining additional information on the ore body or converting non-reserve mineralization to proven and probable reserves and the benefit is expected to be realized over a period beyond one year. All other drilling and related costs are expensed as incurred. Drilling costs incurred during the production phase for operational ore control are allocated to inventory costs and then included as a component of Costs applicable to sales.
The cost of removing overburden and waste materials to access the ore body at an open pit mine prior to the production phase are referred to as “pre-stripping costs.” Pre-stripping costs are capitalized during the development of an open pit mine. Where multiple open pits exist at a mining complex utilizing common processing facilities, pre-stripping costs are capitalized at each pit. The removal, production, and sale of de minimis saleable materials may occur during development and are recorded as Other income, net of incremental mining and processing costs.
The production phase of an open pit mine commences when saleable minerals, beyond a de minimis amount, are produced. Stripping costs incurred during the production phase of a mine are variable production costs that are included as a component of inventory to be recognized in Costs applicable to sales in the same period as the revenue from the sale of inventory. The Company's definition of a mine and the mine's production phase may differ from that of other companies in the mining industry resulting in incomparable allocations of stripping costs to deferred mine development and production costs. Other mining companies may expense pre-stripping costs associated with subsequent pits within a mining complex.
Mine development costs are amortized using the units-of-production (“UOP”) method based on estimated recoverable ounces or pounds in proven and probable reserves. To the extent that these costs benefit an entire ore body, they are amortized over the estimated life of the ore body. Costs incurred to access specific ore blocks or areas that only provide benefit over the life of that area are amortized over the estimated life of that specific ore block or area.
Mineral Interests
Mineral interests include acquired interests in production, development and exploration stage properties. The mineral interests are capitalized at their fair value at the acquisition date, either as an individual asset purchase or as part of a business combination.
The value of such assets is primarily driven by the nature and amount of mineralized material believed to be contained in such properties. Production stage mineral interests represent interests in operating properties that contain proven and probable reserves. Development stage mineral interests represent interests in properties under development that contain proven and probable reserves. Exploration stage mineral interests represent interests in properties that are believed to potentially contain mineralized material consisting of (i) mineralized material such as inferred material within pits; measured, indicated and inferred material with insufficient drill spacing to qualify as proven and probable reserves; and inferred material in close proximity to proven and probable reserves; (ii) around-mine exploration potential such as inferred material not immediately adjacent to existing reserves and mineralization, but located within the immediate mine area; (iii) other mine-related exploration potential that is not part of measured, indicated or inferred material and is comprised mainly of material outside of the immediate mine area; (iv) greenfields exploration potential that is not associated with any other production, development or exploration stage property, as described above; or (v) any acquired right to explore or extract a potential mineral deposit. The Company's mineral rights generally are enforceable regardless of whether proven and probable reserves have been established. In certain limited situations, the nature of a mineral right changes from an exploration right to a mining right upon the establishment of proven and probable reserves. The Company has the ability and intent to renew mineral interests where the existing term is not sufficient to recover all identified and valued proven and probable reserves and/or undeveloped mineralized material.
Asset Impairment
The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. An impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the assets, including goodwill, if any. An impairment loss is measured and recorded based on discounted estimated future cash flows. Future cash flows are estimated based on quantities of recoverable minerals, expected gold and other commodity prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans. Existing proven and probable reserves and value beyond proven and probable reserves, including mineralization that is not part of the measured, indicated or inferred resource base, are included when determining the fair value of mine site reporting units at acquisition and, subsequently, in determining whether the assets are impaired. The term “recoverable minerals” refers to the estimated amount of gold or other commodities that will be obtained after taking into account losses during ore processing and treatment. Estimates of recoverable minerals from such exploration stage mineral interests are risk adjusted based on management's relative confidence in such materials. In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. The Company's estimates of future cash flows are based on numerous assumptions and it is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, gold and other commodity prices, production levels and costs and capital are each subject to significant risks and uncertainties.
Revenue Recognition
Revenue is recognized, net of treatment and refining charges, from a sale when persuasive evidence of an arrangement exists, the price is determinable, the product has been delivered, the title has been transferred to the customer and collection of the sales price is reasonably assured. Revenues from by-product sales are credited to Costs applicable to sales as a by-product credit.
Concentrate sales are initially recorded based on 100% of the provisional sales prices. Until final settlement occurs, adjustments to the provisional sales prices are made to take into account the mark-to-market changes based on the forward prices for the estimated month of settlement. For changes in metal quantities upon receipt of new information and assay, the provisional sales quantities are adjusted as well. The principal risks associated with recognition of sales on a provisional basis include metal price fluctuations between the date initially recorded and the date of final settlement. If a significant decline in metal prices occurs between the provisional pricing date and the final settlement date, it is reasonably possible that the Company could be required to return a portion of the sales proceeds received based on the provisional invoice.
The Company's sales based on a provisional price contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of the concentrates at the forward exchange price at the time of sale. The embedded derivative, which does not qualify for hedge accounting, is marked to market through earnings each period prior to final settlement.
Income and Mining Taxes
The Company accounts for income taxes using the liability method, recognizing certain temporary differences between the financial reporting basis of the Company's liabilities and assets and the related income tax basis for such liabilities and assets. This method generates either a net deferred income tax liability or asset for the Company, as measured by the statutory tax rates in effect. The Company derives its deferred income tax charge or benefit by recording the change in either the net deferred income tax liability or asset balance for the year. Mining taxes represent state and provincial taxes levied on mining operations and are classified as income taxes; as such taxes are based on a percentage of mining profits. With respect to the earnings that the Company derives from the operations of its consolidated subsidiaries, in those situations where the earnings are indefinitely reinvested, no deferred taxes have been provided on the unremitted earnings (including the excess of the carrying value of the net equity of such entities for financial reporting purposes over the tax basis of such equity) of these consolidated companies.
The Company's deferred income tax assets include certain future tax benefits. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized.
The Company's operations involve dealing with uncertainties and judgments in the application of complex tax regulations in multiple jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions and resolution of disputes arising from federal, state, and international tax audits. The Company recognizes potential liabilities and records tax liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on its estimate of whether, and the extent to which, additional taxes will be due. The Company adjusts these reserves in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company's current estimate of the tax liabilities. If the Company's estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If the estimate of tax liabilities proves to be greater than the ultimate assessment, a tax benefit would result. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in Income and mining tax expense.
Reclamation and Remediation Costs
Reclamation obligations are recognized when incurred and recorded as liabilities at fair value. The liability is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is capitalized as part of the asset's carrying value and amortized over the life of the related asset. Reclamation costs are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation and abandonment costs. The reclamation obligation is based on when spending for an existing environmental disturbance will occur. The Company reviews, on an annual basis, unless otherwise deemed necessary, the reclamation obligation at each mine site in accordance with ASC guidance for accounting reclamation obligations.
Future remediation costs for inactive mines are accrued based on management's best estimate at the end of each period of the costs expected to be incurred at a site. Such cost estimates include, where applicable, ongoing care, maintenance and monitoring costs. Changes in estimates at inactive mines are reflected in earnings in the period an estimate is revised.
Foreign Currency
The functional currency for the majority of the Company's operations, including the Australian operations, is the U.S. dollar. All monetary assets and liabilities where the functional currency is the U.S. dollar are translated at current exchange rates and the resulting adjustments are included in Other income, net. All monetary assets and liabilities recorded in functional currencies other than U.S. dollars are translated at current exchange rates and the resulting adjustments are charged or credited directly to Accumulated other comprehensive income in Equity. Revenues and expenses in foreign currencies are translated at the weighted-average exchange rates for the period.
Derivative Instruments
Newmont has fixed forward contracts designated as cash flow hedges in place to hedge against changes in foreign exchanges rates and diesel prices and fixed to floating interest rate swap contracts designated as fair value hedges to provide balance to the Company's mix of fixed and floating rate debt. The fair value of derivative contracts qualifying as cash flow hedges are reflected as assets or liabilities in the balance sheet. To the extent these hedges are effective in offsetting forecasted cash flows from production costs (the “effective portion”), changes in fair value are deferred in Accumulated other comprehensive income. Amounts deferred in Accumulated other comprehensive income are reclassified to Costs applicable to sales, as applicable, when the hedged transaction has occurred. The ineffective portion of the change in the fair value of the derivative is recorded in Other income, net in each period. Cash transactions related to the Company's derivative contracts accounted for as hedges are classified in the same category as the item being hedged in the statement of cash flows.
When derivative contracts qualifying as cash flow hedges are settled, accelerated or restructured before the maturity date of the contracts, the related amount in Accumulated other comprehensive income at the settlement date is deferred and reclassified to earnings, as applicable, when the originally designated hedged transaction impacts earnings.
The fair value of derivative contracts qualifying as fair value hedges are reflected as assets or liabilities in the balance sheet. Changes in fair value are recorded in income in each period, consistent with recording changes to the mark-to-market value of the underlying hedged asset or liability in income. Changes in the mark-to-market value of the effective portion of interest rate swaps utilized by the Company to swap a portion of its fixed rate interest rate risk to floating rate risk are recognized as a component of Interest expense, net.
Newmont assesses the effectiveness of the derivative contracts periodically using either regression analysis or the dollar offset approach, both retrospectively and prospectively, to determine whether the hedging instruments have been highly effective in offsetting changes in the fair value of the hedged items. The Company will also assess periodically whether the hedging instruments are expected to be highly effective in the future. If a hedging instrument is not expected to be highly effective, the Company will stop hedge accounting prospectively. In those instances, the gains or losses remain in Accumulated other comprehensive income until the hedged item affects earnings.
The ASC guidance for derivatives and hedging was updated for enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and the related hedged items are accounted for, and how derivative instruments and the related hedged items affect an entity's financial position, financial performance and cash flows. The Company adopted the updated guidance on January 1, 2009.
Net Income per Common Share
Basic and diluted income per share are presented for Net income attributable to Newmont stockholders and for Income from continuing operations attributable to Newmont stockholders. Basic income per share is computed by dividing income available to common shareholders by the weighted-average number of outstanding common shares for the period, including the exchangeable shares (see Notes 14 and 23). Diluted income per share reflects the potential dilution that could occur if securities or other contracts that may require the issuance of common shares in the future were converted. Diluted income per share is computed by increasing the weighted-average number of outstanding common shares to include the additional common shares that would be outstanding after conversion and adjusting net income for changes that would result from the conversion. Only those securities or other contracts that result in a reduction in earnings per share are included in the calculation.
Comprehensive Income
In addition to Net income, Comprehensive income (loss) includes all changes in equity during a period, such as adjustments to minimum pension liabilities, foreign currency translation adjustments, the effective portion of changes in fair value of derivative instruments that qualify as cash flow hedges and cumulative unrecognized changes in fair value of marketable securities available-for-sale or other investments, except those resulting from investments by and distributions to owners.
Reclassifications
Certain amounts in prior years have been reclassified to conform to the 2010 presentation. The Company reclassified certain income based state and provincial taxes from Costs applicable to sales to Income and mining tax expense, and reclassified reclamation accretion and estimate revisions for non-operating sites from Other expense, net to Reclamation and remediation.
Recently Adopted Accounting Pronouncements
Variable Interest Entities
In June 2009, the ASC guidance for consolidation accounting was updated to require an entity to perform a qualitative analysis to determine whether the enterprise's variable interest gives it a controlling financial interest in a VIE. This qualitative analysis identifies the primary beneficiary of a VIE as the entity that has both of the following characteristics: (i) the power to direct the activities of a VIE that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses or receive benefits from the entity that could potentially be significant to the VIE. The updated guidance also requires ongoing reassessments of the primary beneficiary of a VIE. Adoption of the updated guidance, effective for the Company's fiscal year beginning January 1, 2010, had no impact on the Company's consolidated financial position, results of operations or cash flows.
Fair Value Accounting
In January 2010, ASC guidance for fair value measurements and disclosure was updated to require additional disclosures related to transfers in and out of level 1 and 2 fair value measurements. The guidance was amended to clarify the level of disaggregation required for assets and liabilities and the disclosures required for inputs and valuation techniques used to measure the fair value of assets and liabilities that fall in either level 2 or level 3. The updated guidance was effective for the Company's fiscal year beginning January 1, 2010. The adoption had no impact on the Company's consolidated financial position, results of operations or cash flows. Refer to Note 16 for further details regarding the Company's assets and liabilities measured at fair value.
Recently Issued Accounting Pronouncements
Business Combinations
In December 2010, the ASC guidance for business combinations was updated to clarify existing guidance which requires a public entity to disclose pro forma revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual period only. The update also expands the supplemental pro forma disclosures required to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The updated guidance is effective for the Company's fiscal year beginning January 1, 2011. The Company is evaluating the potential impact of adopting this guidance on the Company's consolidated financial position, results of operations and cash flows.
Fair Value Accounting
In January 2010, the ASC guidance for fair value measurements and disclosure was updated to require enhanced detail in the level 3 reconciliation. The updated guidance is effective for the Company's fiscal year beginning January 1, 2011. The Company expects minimal impact from adopting this guidance.
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NOTE 3 SEGMENT INFORMATION
The Company predominantly operates in a single industry, namely exploration for and production of gold. The Company's reportable segments are based upon the Company's management structure that is focused on the geographic region for the Company's operations and include North America, South America, Asia Pacific, Africa and Corporate and Other. The Company's major operations include Nevada, Yanacocha, Boddington, Batu Hijau, Other Australia/New Zealand and Ahafo. The Company identifies its reportable segments as those consolidated mining operations or functional groups that represent more than 10% of the combined revenue, profit or loss or total assets of all reported operating segments. Consolidated mining operations or functional groups not meeting this threshold are aggregated at the applicable geographic region or corporate level for segment reporting purposes. Earnings from operations do not reflect general corporate expenses, interest (except project-specific interest) or income and mining taxes (except for equity investments). Intercompany revenue and expense amounts have been eliminated within each segment in order to report on the basis that management uses internally for evaluating segment performance. The financial information relating to the Company's segments is as follows:
Costs | Advanced | |||||||||||||||||||||
Applicable to | Projects and | Pre-Tax | Total | Capital | ||||||||||||||||||
Sales | Sales | Amortization | Exploration | Income | Assets | Expenditures(1) | ||||||||||||||||
Year Ended December 31, 2010 | ||||||||||||||||||||||
Nevada | $ | 2,111 | $ | 974 | $ | 271 | $ | 85 | $ | 738 | $ | 3,387 | $ | 298 | ||||||||
La Herradura | 217 | 73 | 19 | 6 | 118 | 216 | 41 | |||||||||||||||
Hope Bay | - | - | 13 | 98 | (111) | 2,152 | 115 | |||||||||||||||
Other North America | - | - | 1 | 1 | (1) | 112 | - | |||||||||||||||
North America | 2,328 | 1,047 | 304 | 190 | 744 | 5,867 | 454 | |||||||||||||||
Yanacocha | 1,778 | 630 | 162 | 24 | 893 | 2,682 | 167 | |||||||||||||||
Other South America | - | - | 1 | 38 | (34) | 292 | 134 | |||||||||||||||
South America | 1,778 | 630 | 163 | 62 | 859 | 2,974 | 301 | |||||||||||||||
Boddington: | ||||||||||||||||||||||
Gold | 834 | 400 | 113 | |||||||||||||||||||
Copper | 162 | 93 | 25 | |||||||||||||||||||
Total Boddington | 996 | 493 | 138 | 6 | 304 | 4,323 | 146 | |||||||||||||||
Batu Hijau: | ||||||||||||||||||||||
Gold | 776 | 155 | 42 | |||||||||||||||||||
Copper | 1,686 | 337 | 90 | |||||||||||||||||||
Total Batu Hijau | 2,462 | 492 | 132 | 3 | 1,736 | 3,398 | 67 | |||||||||||||||
Other Australia/New Zealand | 1,321 | 585 | 108 | 31 | 575 | 1,025 | 176 | |||||||||||||||
Other Asia Pacific | - | - | 2 | 19 | (14) | 535 | 17 | |||||||||||||||
Asia Pacific | 4,779 | 1,570 | 380 | 59 | 2,601 | 9,281 | 406 | |||||||||||||||
Ahafo | 655 | 237 | 78 | 24 | 298 | 1,055 | 109 | |||||||||||||||
Other Africa | - | - | - | 9 | (10) | 291 | 70 | |||||||||||||||
Africa | 655 | 237 | 78 | 33 | 288 | 1,346 | 179 | |||||||||||||||
Corporate and Other | - | - | 20 | 90 | (495) | 6,195 | 34 | |||||||||||||||
Consolidated | $ | 9,540 | $ | 3,484 | $ | 945 | $ | 434 | $ | 3,997 | $ | 25,663 | $ | 1,374 | ||||||||
(1) | Accrual basis includes a decrease in accrued capital expenditures of $28; consolidated capital expenditures on a cash basis were $1402. |
Costs | Advanced | |||||||||||||||||||||
Applicable to | Projects and | Pre-Tax | Total | Capital | ||||||||||||||||||
Sales | Sales | Amortization | Exploration | Income | Assets | Expenditures(1) | ||||||||||||||||
Year Ended December 31, 2009 | ||||||||||||||||||||||
Nevada | $ | 1,943 | $ | 1,019 | $ | 261 | $ | 54 | $ | 583 | $ | 3,236 | $ | 205 | ||||||||
La Herradura | 113 | 42 | 11 | 3 | 57 | 137 | 54 | |||||||||||||||
Hope Bay | - | - | 12 | 66 | (77) | 1,862 | 5 | |||||||||||||||
Other North America | - | - | - | 2 | (7) | 55 | - | |||||||||||||||
North America | 2,056 | 1,061 | 284 | 125 | 556 | 5,290 | 264 | |||||||||||||||
Yanacocha | 2,013 | 642 | 168 | 23 | 1,089 | 2,472 | 119 | |||||||||||||||
Other South America | - | - | - | 23 | 1 | 32 | 27 | |||||||||||||||
South America | 2,013 | 642 | 168 | 46 | 1,090 | 2,504 | 146 | |||||||||||||||
Boddington | ||||||||||||||||||||||
Gold | 101 | 45 | 15 | |||||||||||||||||||
Copper | 27 | 16 | 4 | |||||||||||||||||||
Total Boddington | 128 | 61 | 19 | 32 | (59) | 3,975 | 1,093 | |||||||||||||||
Batu Hijau: | ||||||||||||||||||||||
Gold | 550 | 118 | 30 | |||||||||||||||||||
Copper | 1,292 | 307 | 78 | |||||||||||||||||||
Total Batu Hijau | 1,842 | 425 | 108 | - | 1,242 | 3,129 | 44 | |||||||||||||||
Other Australia/New Zealand | 1,138 | 577 | 136 | 21 | 374 | 870 | 122 | |||||||||||||||
Other Asia Pacific | - | - | 3 | 12 | (50) | 256 | 3 | |||||||||||||||
Asia Pacific | 3,108 | 1,063 | 266 | 65 | 1,507 | 8,230 | 1,262 | |||||||||||||||
Ahafo | 528 | 242 | 68 | 13 | 178 | 985 | 75 | |||||||||||||||
Other Africa | - | - | - | 10 | (7) | 202 | 10 | |||||||||||||||
Africa | 528 | 242 | 68 | 23 | 171 | 1,187 | 85 | |||||||||||||||
Corporate and Other | - | - | 20 | 63 | (370) | 5,088 | 16 | |||||||||||||||
Consolidated | $ | 7,705 | $ | 3,008 | $ | 806 | $ | 322 | $ | 2,954 | $ | 22,299 | $ | 1,773 | ||||||||
(1) | Accrual basis includes an increase in accrued capital expenditures of $4; consolidated capital expenditures on a cash basis were $1769. |
Costs | Advanced | |||||||||||||||||||||
Applicable to | Projects and | Pre-Tax | Total | Capital | ||||||||||||||||||
Sales | Sales | Amortization | Exploration | Income | Assets(1) | Expenditures(2) | ||||||||||||||||
Year Ended December 31, 2008 | ||||||||||||||||||||||
Nevada | $ | 1,929 | $ | 993 | $ | 246 | $ | 50 | $ | 591 | $ | 3,215 | $ | 299 | ||||||||
La Herradura | 83 | 38 | 8 | 6 | 32 | 90 | 27 | |||||||||||||||
Hope Bay | - | - | 1 | 59 | (59) | 1,621 | 82 | |||||||||||||||
Other North America | - | - | - | 29 | (163) | 52 | - | |||||||||||||||
North America | 2,012 | 1,031 | 255 | 144 | 401 | 4,978 | 408 | |||||||||||||||
Yanacocha | 1,613 | 637 | 170 | 28 | 694 | 1,902 | 202 | |||||||||||||||
Other South America | - | - | - | 38 | (8) | 30 | 34 | |||||||||||||||
South America | 1,613 | 637 | 170 | 66 | 686 | 1,932 | 236 | |||||||||||||||
Boddington | - | - | - | 10 | (13) | 1,735 | 815 | |||||||||||||||
Batu Hijau: | ||||||||||||||||||||||
Gold | 261 | 124 | 25 | |||||||||||||||||||
Copper | 752 | 399 | 80 | |||||||||||||||||||
Total Batu Hijau | 1,013 | 523 | 105 | 2 | 301 | 2,371 | 83 | |||||||||||||||
Other Australia/New Zealand | 1,050 | 642 | 122 | 24 | 268 | 819 | 130 | |||||||||||||||
Other Asia Pacific | - | - | 3 | 16 | (101) | 87 | 2 | |||||||||||||||
Asia Pacific | 2,063 | 1,165 | 230 | 52 | 455 | 5,012 | 1,030 | |||||||||||||||
Ahafo | 435 | 205 | 63 | 18 | 145 | 984 | 109 | |||||||||||||||
Other Africa | - | - | - | 31 | (31) | 197 | 2 | |||||||||||||||
Africa | 435 | 205 | 63 | 49 | 114 | 1,181 | 111 | |||||||||||||||
Corporate and Other | 1 | - | 20 | 68 | (362) | 2,624 | 20 | |||||||||||||||
Consolidated | $ | 6,124 | $ | 3,038 | $ | 738 | $ | 379 | $ | 1,294 | $ | 15,727 | $ | 1,805 | ||||||||
(1) | Corporate and Other includes $73 of Assets held for sale. | |||||||||||||||||||||
(2) | Accrual basis includes a decrease in accrued capital expenditures of $65; consolidated capital expenditures on a cash basis were $1870. |
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Write-down of property, plant and mine development: | |||||||||||
Nevada | $ | 4 | $ | 1 | $ | 4 | |||||
Yanacocha | - | 1 | - | ||||||||
Batu Hijau | 1 | 4 | 10 | ||||||||
Other Australia/New Zealand | 1 | 1 | 2 | ||||||||
Corporate and other | - | - | 121 | ||||||||
$ | 6 | $ | 7 | $ | 137 |
At December 31, | ||||||||
2010 | 2009 | |||||||
Stockpiles and ore on leach pads: | ||||||||
Nevada | $ | 479 | $ | 445 | ||||
La Herradura | 6 | 5 | ||||||
Yanacocha | 496 | 369 | ||||||
Boddington | 248 | 59 | ||||||
Batu Hijau | 879 | 834 | ||||||
Other Australia/New Zealand | 145 | 121 | ||||||
Ahafo | 121 | 72 | ||||||
$ | 2,374 | $ | 1,905 |
Revenues from export and domestic sales were as follows: | |||||||||||
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Europe | $ | 6,209 | $ | 5,573 | $ | 4,756 | |||||
Japan | 1,544 | 833 | 464 | ||||||||
Korea | 760 | 465 | 231 | ||||||||
Indonesia | 372 | 440 | 307 | ||||||||
Mexico | 217 | 113 | 83 | ||||||||
Australia | 110 | 222 | 170 | ||||||||
India | - | 30 | 32 | ||||||||
Other | 328 | 29 | 81 | ||||||||
$ | 9,540 | $ | 7,705 | $ | 6,124 |
As gold can be sold through numerous gold market traders worldwide, the Company is not economically dependent on a limited number of customers for the sale of its product. In 2010, 2009 and 2008, sales to Bank of Nova Scotia were $2,435 (32%), $2,658 (42%) and $1,618 (30%), respectively, of total gold sales. Additionally in 2008, the Company had sales to BNP Paribas that totaled $1,239 (23%) of total gold sales.
Long-lived assets, excluding deferred tax assets, investments and restricted cash, were as follows:
At December 31, | |||||||
2010 | 2009 | ||||||
Australia | $ | 5,055 | $ | 4,683 | |||
United States | 3,031 | 3,059 | |||||
Canada | 2,088 | 1,869 | |||||
Indonesia | 2,109 | 2,067 | |||||
Peru | 1,772 | 1,443 | |||||
Ghana | 1,231 | 1,093 | |||||
Other | 94 | 70 | |||||
$ | 15,380 | $ | 14,284 |
|
NOTE 4 RECLAMATION AND REMEDIATION
The Company's mining and exploration activities are subject to various federal and state laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. The Company conducts its operations to protect public health and the environment and believes its operations are in compliance with applicable laws and regulations in all material respects. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures. Estimated future reclamation costs are based principally on legal and regulatory requirements.
At December 31, 2010 and 2009, $904 and $698, respectively, were accrued for reclamation obligations relating to mineral properties. In addition, the Company is involved in several matters concerning environmental obligations associated with former, primarily historic, mining activities. Generally, these matters concern developing and implementing remediation plans at the various sites involved. At December 31, 2010 and 2009, $144 and $161, respectively, were accrued for such obligations. These amounts are also included in Reclamation and remediation liabilities.
Included in Other long-term assets at December 31, 2010 and 2009 is $12 and $11, respectively, of restricted cash that is legally restricted for purposes of settling asset retirement obligations related to the Con mine in Yellowknife, NWT, Canada. Included in Investments at December 31, 2010 and 2009 are $10 and $10 of long-term marketable debt securities, respectively, and $6 and $5 long-term marketable equity securities, respectively, which are legally pledged for purposes of settling asset retirement obligations related to the San Jose Reservoir in Yanacocha.
The following is a reconciliation of reclamation and remediation liabilities:
Balance January 1, 2009 | $ | 757 | ||||
Additions, changes in estimates and other | 105 | |||||
Liabilities settled | (49) | |||||
Accretion expense | 46 | |||||
Balance December 31, 2009 | 859 | |||||
Additions, changes in estimates and other | 188 | |||||
Liabilities settled | (51) | |||||
Accretion expense | 52 | |||||
Balance December 31, 2010 | $ | 1,048 |
The current portion of Reclamation and remediation liabilities of $64 and $54 at December 31, 2010 and 2009, respectively, are included in Other current liabilities (see Note 24).
The Company's reclamation and remediation expenses consisted of:
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Reclamation | $ | 13 | $ | 13 | $ | 101 | |||||
Accretion - operating | 44 | 34 | 31 | ||||||||
Accretion - non-operating | 8 | 12 | 10 | ||||||||
$ | 65 | $ | 59 | $ | 142 |
Additions to the reclamation liability in 2010 of $188 include $186 for currently or recently producing properties due mainly to increased water treatment costs as a result of mine plan changes for Yanacocha, increased demolition costs for Boddington, an increase in the tailings area at Kalgoorlie, increased backfill at Phoenix, increased activity at Hope Bay and $2 for historic mining operations primarily related to additional water management costs.
Additions to the reclamation liability in 2009 of $105 include $90 for currently or recently producing properties due mainly to increased disturbance area at Batu Hijau, post-mine backfilling of underground operations and an increase in the tailings area at Kalgoorlie, increased backfill at Phoenix and the acquisition of the remaining one-third of Boddington. Additions to the reclamation liability in 2009 also include $15 for historic mining operations for additional water management costs, property acquisitions and other related activities.
|
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Major projects: | |||||||||||
Hope Bay | $ | 74 | $ | 25 | $ | 39 | |||||
Subika underground | 11 | 2 | - | ||||||||
Conga | 8 | 4 | 4 | ||||||||
Akyem | 5 | 8 | 7 | ||||||||
Boddington | - | 25 | 3 | ||||||||
Other projects: | |||||||||||
Technical and project services | 49 | 24 | 23 | ||||||||
Corporate | 29 | 14 | 15 | ||||||||
Other | 40 | 33 | 75 | ||||||||
$ | 216 | $ | 135 | $ | 166 | ||||||
NOTE 5 ADVANCED PROJECTS, RESEARCH AND DEVELOPMENT
|
NOTE 6 OTHER EXPENSE, NET | |||||||||||
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Community development | $ | 111 | $ | 84 | $ | 87 | |||||
Regional administration | 64 | 55 | 48 | ||||||||
Western Australia power plant | 15 | 37 | 18 | ||||||||
World Gold Council dues | 13 | 11 | 10 | ||||||||
Batu Hijau divestiture | 4 | 12 | 15 | ||||||||
Revaluation of contingent consideration | 2 | 23 | - | ||||||||
Boddington acquisition costs | - | 67 | - | ||||||||
Other | 52 | 69 | 62 | ||||||||
$ | 261 | $ | 358 | $ | 240 |
|
NOTE 7 OTHER INCOME, NET | |||||||||||
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Canadian Oil Sands Trust distributions | $ | 55 | $ | 26 | $ | 110 | |||||
Gain on asset sales, net | 48 | 16 | 42 | ||||||||
Income from developing projects, net | 18 | 4 | 12 | ||||||||
Gain on sale of investments, net | 16 | 8 | 30 | ||||||||
European Gold Refinery income | 14 | 14 | 4 | ||||||||
Interest income | 11 | 16 | 29 | ||||||||
Impairment of marketable securities | (1) | (6) | (114) | ||||||||
Foreign currency exchange losses, net | (64) | (1) | (12) | ||||||||
Other | 12 | 11 | 22 | ||||||||
$ | 109 | $ | 88 | $ | 123 | ||||||
|
NOTE 8 EMPLOYEE RELATED BENEFITS | |||||||||
At December 31, | |||||||||
2010 | 2009 | ||||||||
Current: | |||||||||
Accrued payroll and withholding taxes | $ | 189 | $ | 152 | |||||
Peruvian workers’ participation | 49 | 59 | |||||||
Employee pension benefits | 6 | 4 | |||||||
Other post-retirement plans | 3 | 4 | |||||||
Accrued severance | 2 | 3 | |||||||
Other employee-related payables | 39 | 28 | |||||||
$ | 288 | $ | 250 | ||||||
At December 31, | |||||||||
2010 | 2009 | ||||||||
Long-term: | |||||||||
Employee pension benefits | $ | 127 | $ | 204 | |||||
Other post-retirement benefit plans | 92 | 91 | |||||||
Accrued severance | 73 | 57 | |||||||
Peruvian workers’ participation | 18 | 17 | |||||||
Other employee-related payables | 15 | 12 | |||||||
$ | 325 | $ | 381 |
Pension and Other Benefit Plans
The Company provides defined benefit pension plans to eligible employees. Benefits are generally based on years of service and the employee's average annual compensation. Various international pension plans are based on local laws and requirements. Pension costs are determined annually by independent actuaries and pension contributions to the qualified plans are made based on funding standards established under the Employee Retirement Income Security Act of 1974, as amended.
The Company sponsors retiree health care plans that provide prescription drug benefits to eligible retirees that our plans' actuaries have determined are actuarially equivalent to Medicare Part D. The effect of the federal subsidies received decreased post-retirement projected accumulated benefit obligation (“ABO”) by $7 in 2009. In 2010, Congress passed certain measures of healthcare reform which changed the tax-free status of Medicare Part D subsidies and eliminated the impact on the post-retirement ABO.
The following tables provide a reconciliation of changes in the plans' benefit obligations and assets' fair values for 2010 and 2009:
Pension Benefits | Other Benefits | ||||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||||
Change in Benefit Obligation: | |||||||||||||||
Benefit obligation at beginning of year | $ | 580 | $ | 518 | $ | 95 | $ | 89 | |||||||
Service cost | 21 | 18 | 2 | 2 | |||||||||||
Interest cost | 36 | 32 | 6 | 5 | |||||||||||
Actuarial (gain) loss | 68 | 29 | (6) | 1 | |||||||||||
Amendments | 2 | - | - | - | |||||||||||
Foreign currency exchange loss | 2 | 5 | - | 1 | |||||||||||
Settlement payments | (1) | (1) | - | - | |||||||||||
Benefits paid | (27) | (21) | (2) | (3) | |||||||||||
Projected benefit obligation at end of year | $ | 681 | $ | 580 | N/A | N/A | |||||||||
Accumulated Benefit Obligation | $ | 543 | $ | 465 | $ | 95 | $ | 95 | |||||||
Change in Fair Value of Assets: | |||||||||||||||
Fair value of assets at beginning of year | $ | 372 | $ | 278 | $ | - | $ | - | |||||||
Actual return on plan assets | 53 | 61 | - | - | |||||||||||
Employer contributions | 161 | 55 | 2 | 3 | |||||||||||
Foreign currency exchange loss | 1 | - | - | - | |||||||||||
Settlement payments | (1) | (1) | - | - | |||||||||||
Benefits paid | (27) | (21) | (2) | (3) | |||||||||||
Fair value of assets at end of year | $ | 559 | $ | 372 | $ | - | $ | - | |||||||
Unfunded status, net | $ | 122 | $ | 208 | $ | 95 | $ | 95 |
The Company's qualified pension plans are funded with cash contributions in compliance with Internal Revenue Service (“IRS”) rules and regulations. The Company's non-qualified and other benefit plans are currently not funded, but exist as general corporate obligations. The information contained in the above tables indicates the combined funded status of qualified and non-qualified plans, in accordance with accounting pronouncements. The Company is currently planning to contribute at least $18 to its retirement benefit programs in 2011.
The following table provides the net amounts recognized in the Consolidated Balance Sheets at December 31:
Pension Benefits | Other Benefits | ||||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||||
Accrued employee benefit liability | $ | 122 | $ | 208 | $ | 95 | $ | 95 | |||||||
Accumulated other comprehensive income (loss): | |||||||||||||||
Net actuarial gain (loss) | $ | (263) | $ | (240) | $ | 12 | $ | 8 | |||||||
Prior service credit (cost) | (8) | (7) | 5 | 5 | |||||||||||
(271) | (247) | 17 | 13 | ||||||||||||
Less: Income taxes | 95 | 86 | (6) | (4) | |||||||||||
$ | (176) | $ | (161) | $ | 11 | $ | 9 |
The following table provides components of the net periodic pension and other benefits costs for the years ended December 31:
Pension Benefit Costs | Other Benefit Costs | ||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||
Service cost | $ | 21 | $ | 18 | $ | 15 | $ | 2 | $ | 2 | $ | 2 | |||||||
Interest cost | 36 | 32 | 29 | 6 | 5 | 5 | |||||||||||||
Expected return on plan assets | (32) | (29) | (28) | - | - | - | |||||||||||||
Amortization, net | 17 | 16 | 4 | (1) | (1) | (3) | |||||||||||||
Settlements | - | - | 13 | - | - | - | |||||||||||||
$ | 42 | $ | 37 | $ | 33 | $ | 7 | $ | 6 | $ | 4 |
The following table provides the components recognized in Other comprehensive income (loss) for the years ended December 31:
Pension Benefits | Other Benefits | ||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||
Net gain (loss) | $ | (41) | $ | 7 | $ | (196) | $ | 5 | $ | (1) | $ | (17) | |||||||
Amortization, net | 17 | 16 | 17 | (1) | (1) | (3) | |||||||||||||
Total recognized in Other comprehensive income (loss) | $ | (24) | $ | 23 | $ | (179) | $ | 4 | $ | (2) | $ | (20) | |||||||
Total recognized in net periodic benefit cost and Other comprehensive income (loss) | $ | (66) | $ | (14) | $ | (212) | $ | (3) | $ | (7) | $ | (24) |
The expected recognition of amounts in Accumulated other comprehensive income (loss) is $22 and $1 for net actuarial loss and prior service cost for pension benefits in 2011, respectively, and $nil and $1 for net actuarial gain and prior service credit for other benefits in 2011, respectively.
Significant assumptions were as follows: | |||||||||||||||
Pension Benefits | Other Benefits | ||||||||||||||
At December 31, | At December 31, | ||||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||||
Weighted-average assumptions used in measuring the Company’s benefit obligation: | |||||||||||||||
Discount rate | 5.75 | % | 6.10 | % | 5.75 | % | 6.10 | % | |||||||
Rate of compensation increase | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % |
Pension Benefits | Other Benefits | ||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||
Weighted-average assumptions used in measuring the net periodic pension benefit cost: | |||||||||||||||||||||
Discount long-term rate | 6.10 | % | 6.05 | % | 6.80 | % | 6.10 | % | 6.05 | % | 6.80 | % | |||||||||
Expected return on plan assets | 8.00 | % | 8.00 | % | 8.00 | % | N/A | N/A | N/A | ||||||||||||
Rate of compensation increase | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % |
Yield curves matching our benefit obligations were derived using a model based on high quality corporate bond data from Bloomberg in 2010. The model develops a discount rate by selecting a portfolio of high quality corporate bonds whose projected cash flows match the projected benefit payments of the plan. In 2009, the Company used yield curves modeled from cash flow analysis under the Citigroup Above Median Pension Discount Curve. The resulting curves were used to identify a discount rate for the Company of 5.75% and 6.10% in 2010 and 2009, respectively, based on the timing of future benefit payments. The decision to use 8% as the expected long-term return on plan assets was made based on an analysis of the actual plan asset returns over multiple time horizons and comparable other U.S. corporations. The average actual return on plan assets during the 22 years ended December 31, 2010 approximated 9%.
The pension plans employ several independent investment firms which invest the assets of the plans in certain approved funds that correspond to specific asset classes with associated target allocations. The goal of the pension fund investment program is to achieve prudent actuarial funding ratios while maintaining acceptable risk levels. The investment performance of the plans and that of the individual investment firms is measured against recognized market indices. The performance of the pension funds are monitored by an investment committee comprised of members of the Company's management, which is advised by an independent investment consultant. With the exception of global capital market economic risks, the Company has identified no significant portfolio risks associated to asset classes. The following is a summary of the target asset allocations for 2010 and the actual asset allocation at December 31, 2010.
Actual at | ||||||||
December 31, | ||||||||
Asset Allocation | Target | 2010 | ||||||
U.S. equity investments | 40 | % | 40 | % | ||||
International equity investments | 25 | % | 25 | % | ||||
Fixed income investments | 30 | % | 35 | % | ||||
Cash | 5 | % | - | % |
The following table sets forth the Company's pension plan assets measured at fair value by level within the fair value hierarchy. Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Fair Value at December 31, 2010 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Plan Assets: | |||||||||||||||
Cash and cash equivalents | $ | 2 | $ | - | $ | - | $ | 2 | |||||||
Commingled funds | - | 557 | - | 557 | |||||||||||
$ | 2 | $ | 557 | $ | - | $ | 559 | ||||||||
Fair Value at December 31, 2009 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Plan Assets: | |||||||||||||||
Cash and cash equivalents | $ | 21 | $ | - | $ | - | $ | 21 | |||||||
Commingled funds | - | 351 | - | 351 | |||||||||||
$ | 21 | $ | 351 | $ | - | $ | 372 |
The Company's cash and cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The cash equivalent instruments that are valued based on quoted market prices in active markets are primarily money market securities and U.S. Treasury securities.
The Company's commingled fund investments are classified within Level 2. The funds are managed by several fund managers and are valued at the net asset value per share for each fund. Although the majority of underlying assets in the funds consist of actively traded equity securities and bonds, the unit of account is considered to be at the fund level, and therefore, the investments are classified as Level 2. At December 31, 2010, the underlying assets of the commingled funds consist of U.S. equity investments (40%), international equity investments (25%) and fixed income investments (35%).
The assumed health care cost trend rate to measure the expected cost of benefits was 8.00% for 2011, 7.25% for 2012, 6.50% for 2013, 5.75% for 2014, and 5.00% for 2015 and each year thereafter. Assumed health care cost trend rates have a significant effect on amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:
One-percentage-point | One-percentage-point | |||||||
Increase | Decrease | |||||||
Effect on total of service and interest cost components of net periodic post-retirement health care benefit cost | $ | 1 | $ | (1) | ||||
Effect on the health care component of the accumulated post-retirement benefit obligation | $ | 15 | $ | (12) |
Cash Flows
Benefit payments to be paid to pension participants are expected to be as follows: $36 in 2011, $25 in 2012, $28 in 2013, $32 in 2014, $38 in 2015, and $232 in total over the five years from 2016 through 2020. Benefit payments made to other benefit plan participants are expected to be as follows: $4 in 2011, $4 in 2012, $4 in 2013, $5 in 2014, $5 in 2015, and $31 in total over the five years from 2015 through 2020.
Savings Plans
The Company has two qualified defined contribution savings plans, one that covers salaried and non-union hourly employees and one that covers substantially all hourly union employees. In addition, the Company has one non-qualified supplemental savings plan for salaried employees whose benefits under the qualified plan are limited by federal regulations. When an employee meets eligibility requirements, the Company matches 100% of employee contributions of up to 6% of base salary for the salaried and hourly union plans. Effective March 2008, the Company makes a contribution between 5.0% and 7.5% (based on continuous years of service) to each non-union hourly employee's retirement contribution account at its sole discretion. Matching contributions are made with Newmont stock; however, no holding restrictions are placed on such contributions, which totaled $15 in 2010, $15 in 2009 and $14 in 2008.
|
NOTE 9 STOCK BASED COMPENSATION
The Company has stock incentive plans for executives and eligible employees. Stock incentive awards include options to purchase shares of stock with exercise prices not less than fair market value of the underlying stock at the date of grant, restricted stock units and performance leveraged stock units. At December 31, 2010, 10,516,994 shares were available for future stock incentive plan awards.
Employee Stock Options
Stock options granted under the Company's stock incentive plans vest over periods of three years or more and are exercisable over a period of time not to exceed 10 years from the grant date. The value of each option award is estimated at the grant date using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the input of subjective assumptions, including the expected term of the option award and stock price volatility. The expected term of options granted is derived from historical data on employee exercise and post-vesting employment termination experience. Expected volatility is based on the historical volatility of our stock at the grant date. These estimates involve inherent uncertainties and the application of management's judgment. In addition, we are required to estimate the expected forfeiture rate and only recognize expense for those options expected to vest. As a result, if other assumptions had been used, our recorded stock based compensation expense would have been different from that reported. The Black-Scholes option pricing model used the following assumptions:
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||
Weighted-average risk-free interest rate | 2.5 | % | 2.0 | % | 3.1 | % | 4.6 | % | 4.9 | % | ||||||
Dividend yield | 0.7 | % | 1.0 | % | 1.0 | % | 1.0 | % | 0.7 | % | ||||||
Expected life in years | 5 | 5 | 5 | 5 | 5 | |||||||||||
Volatility | 38 | % | 36 | % | 30 | % | 32 | % | 34 | % |
The following table summarizes annual activity for all stock options for each of the three years ended December 31: | |||||||||||||||||||
2010 | 2009 | 2008 | |||||||||||||||||
Number of Shares | Weighted Average Exercise Price | Number of Shares | Weighted Average Exercise Price | Number of Shares | Weighted Average Exercise Price | ||||||||||||||
Outstanding at beginning of year | 6,142,073 | $ | 42.65 | 6,463,004 | $ | 42.17 | 6,234,814 | $ | 41.09 | ||||||||||
Granted | 918,343 | $ | 55.68 | 1,157,825 | $ | 39.99 | 1,416,963 | $ | 40.77 | ||||||||||
Exercised | (1,494,686) | $ | 40.38 | (1,204,836) | $ | 36.24 | (931,741) | $ | 30.88 | ||||||||||
Forfeited and expired | (151,525) | $ | 51.02 | (273,920) | $ | 50.20 | (257,032) | $ | 49.17 | ||||||||||
Outstanding at end of year | 5,414,205 | $ | 45.36 | 6,142,073 | $ | 42.65 | 6,463,004 | $ | 42.17 | ||||||||||
Options exercisable at year-end | 3,211,115 | $ | 45.50 | 3,880,866 | $ | 44.39 | 4,464,475 | $ | 42.01 | ||||||||||
Weighted-average fair value of | |||||||||||||||||||
options granted during the year | $ | 20.01 | $ | 12.88 | $ | 11.96 |
The following table summarizes information about stock options outstanding and exercisable at December 31, 2010: | |||||||||||||
Options Outstanding | Options Exercisable | ||||||||||||
Range of Exercise Prices | Number Outstanding | Weighted-Average Remaining Contractual Life (in years) | Weighted-Average Exercise Price | Number Exercisable | Weighted-Average Exercise Price | ||||||||
$20 to $30 | 480,573 | 5.6 | $ | 26.74 | 180,573 | $ | 26.47 | ||||||
$30 to $40 | 1,197,686 | 7.6 | $ | 39.60 | 480,164 | $ | 39.08 | ||||||
$40 to $50 | 2,175,950 | 5.5 | $ | 44.62 | 1,884,578 | $ | 44.65 | ||||||
$50+ | 1,559,996 | 7.6 | $ | 56.54 | 665,800 | $ | 57.71 | ||||||
5,414,205 | 6.6 | $ | 45.36 | 3,211,115 | $ | 45.50 |
At December 31, 2010 there was $21 of unrecognized compensation cost related to 2,203,090 unvested stock options. This cost is expected to be recognized over a weighted-average period of approximately 2 years. The total intrinsic value of options exercised in 2010, 2009 and 2008 was $29, $16 and $15, respectively. At December 31, 2010, the aggregate intrinsic value of outstanding stock options was $87 and the aggregate intrinsic value of exercisable options was $51 at December 31, 2010.
The following stock options vested in each of the three years ended December 31:
2010 | 2009 | 2008 | ||||||||
Stock options vested | 922,463 | 795,566 | 835,982 | |||||||
Weighted-average exercise price | $ | 42.16 | $ | 46.86 | $ | 47.21 |
Other Stock Based Compensation
The Company grants restricted stock units to executives and eligible employees upon achievement of certain financial and operating results. Restricted stock units vest over periods of three years or more. Prior to vesting, holders of restricted stock units do not have the right to vote the underlying shares; however, executives accrue dividend equivalents on their restricted stock units, which are paid at the time the restricted stock units vest. The restricted stock units are subject to forfeiture risk and other restrictions. Upon vesting, the employee is entitled to receive one share of the Company's common stock for each restricted stock unit. In 2010, 2009 and 2008 the Company granted 483,408, 450,195 and 16,360 restricted stock units, respectively, at a weighted-average fair market value of $52, $42 and $39, respectively, per underlying share of the Company's common stock. At December 31, 2010, 454,256, 255,230 and 3,765 shares remain unvested for the 2010, 2009 and 2008 grants, respectively.
The Company grants financial performance stock bonuses to eligible executives upon achievement of certain financial and operating results, based on a targeted number of shares at the beginning of each performance period. At the end of the performance period, one third of the bonus is paid in common stock and two-thirds of the bonus is paid in restricted stock units that vest in equal annual increments at the second and third anniversaries of the start of the performance period. In 2010 and 2009, the Company granted 64,646 and 40,078 common shares, respectively, and 129,302 and 80,172 restricted stock units, respectively, included in the restricted stock unit grants above at a fair market value of $50 and $43 per underlying share of the Company's common stock, respectively, under the financial performance stock bonus plan.
Beginning in 2010, the Company grants performance leveraged stock units (“PSUs”) to eligible executives. In 2010, the Company granted 204,732 PSUs at a weighted-average fair market value of $69. The actual number of PSUs earned will be determined at the end of a three year performance period (except two partial awards that will be based on a one and two year performance period, respectively), based upon certain measures of shareholder return.
Prior to 2009, the Company granted restricted stock awards to executives and deferred stock awards to eligible employees upon achievement of certain financial and operating results. Shares of restricted stock and deferred stock vest over periods of three years or more from the grant date and are subject to certain restrictions related to ownership and transferability prior to vesting. The Company no longer grants restricted stock or deferred stock. In 2008, 218,697 shares of restricted stock, were granted at a weighted-average fair market value of $39 per underlying share of the Company's common stock. At December 31, 2010, 126,391 shares remained unvested for the 2008 restricted stock awards. In 2008, the Company granted 394,095 shares of deferred stock, at a weighted-average fair market value of $44 per underlying share of the Company's common stock. At December 31, 2010, 106,168 shares remained unvested for the 2008 deferred stock awards.
The total intrinsic value of other stock based compensation awards that vested in 2010, 2009 and 2008 was $28, $19 and $14, respectively. At December 31, 2010, there was $25 of unrecognized compensation costs related to the unvested other stock based compensation awards. This cost is expected to be recognized over a weighted-average period of approximately 2 years.
The Company recognized stock based compensation as follows:
Years Ended December 31, | ||||||||||
2010 | 2009 | 2008 | ||||||||
Stock options | $ | 16 | $ | 14 | $ | 16 | ||||
Restricted stock units | 16 | 6 | - | |||||||
Performance leveraged stock units | 7 | - | - | |||||||
Common stock | 3 | 3 | - | |||||||
Restricted stock | 2 | 4 | 6 | |||||||
Deferred stock | 8 | 13 | 12 | |||||||
$ | 52 | $ | 40 | $ | 34 |
|
NOTE 10 INCOME AND MINING TAXES
The Company's Income and mining tax expense consisted of:
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Current: | |||||||||||
United States | $ | (214) | $ | (46) | $ | (104) | |||||
Foreign | (1,022) | (782) | (353) | ||||||||
(1,236) | (828) | (457) | |||||||||
Deferred: | |||||||||||
United States | 518 | 42 | 246 | ||||||||
Foreign | (138) | (43) | 69 | ||||||||
380 | (1) | 315 | |||||||||
$ | (856) | $ | (829) | $ | (142) |
The Company's Income before income and mining tax and other items consisted of:
Years Ended December 31, | ||||||||||
2010 | 2009 | 2008 | ||||||||
United States | $ | 737 | $ | 291 | $ | 563 | ||||
Foreign | 3,260 | 2,663 | 731 | |||||||
$ | 3,997 | $ | 2,954 | $ | 1,294 |
The Company's income and mining tax expense differed from the amounts computed by applying the United States statutory corporate income tax rate for the following reasons:
Years Ended December 31, | |||||||||||||
2010 | 2009 | 2008 | |||||||||||
Income before income and mining tax and other items | $ | 3,997 | $ | 2,954 | $ | 1,294 | |||||||
United States statutory corporate income tax rate | 35 | % | 35 | % | 35 | % | |||||||
Income tax expense computed at United States statutory corporate income tax rate | |||||||||||||
statutory corporate income tax rate | (1,399) | (1,034) | (453) | ||||||||||
Reconciling items: | |||||||||||||
Tax benefit generated on change in form of a non- | 440 | - | 159 | ||||||||||
U.S. subsidiary | |||||||||||||
Percentage depletion | 151 | 127 | 130 | ||||||||||
Resolution of prior years’ uncertain income tax matters | 11 | 38 | 69 | ||||||||||
Change in valuation allowance on deferred tax assets | 18 | 32 | (31) | ||||||||||
Mining taxes (net of federal benefit) | (33) | (27) | (27) | ||||||||||
Other | (44) | 35 | 11 | ||||||||||
Income and mining tax expense | $ | (856) | $ | (829) | $ | (142) |
Components of the Company's deferred income tax assets (liabilities) are as follows: | |||||||||
At December 31, | |||||||||
2010 | 2009 | ||||||||
Deferred income tax assets: | |||||||||
Exploration costs | $ | 75 | $ | 72 | |||||
Depreciation | 6 | 21 | |||||||
Net operating losses and tax credits | 799 | 980 | |||||||
Retiree benefit and vacation accrual costs | 98 | 124 | |||||||
Remediation and reclamation costs | 158 | 132 | |||||||
Investment in partnerships | 563 | 57 | |||||||
Other | 103 | 64 | |||||||
1,802 | 1,450 | ||||||||
Valuation allowances | (435) | (437) | |||||||
1,367 | 1,013 | ||||||||
Deferred income tax liabilities: | |||||||||
Net undistributed earnings of subsidiaries | (237) | (218) | |||||||
Unrealized gain on investments | (176) | (137) | |||||||
Depletable and amortizable costs associated with mineral rights | (857) | (826) | |||||||
Derivative instruments | (25) | (37) | |||||||
Other | - | (1) | |||||||
(1,295) | (1,219) | ||||||||
Net deferred income tax assets (liabilities) | $ | 72 | $ | (206) |
Net deferred income tax assets and liabilities consist of: | ||||||||
At December 31, | ||||||||
2010 | 2009 | |||||||
Current deferred income tax assets | $ | 177 | $ | 215 | ||||
Long-term deferred income tax assets | 1,437 | 937 | ||||||
Current deferred income tax liabilities | (54) | (17) | ||||||
Long-term deferred income tax liabilities | (1,488) | (1,341) | ||||||
$ | 72 | $ | (206) |
Factors that Significantly Impact Effective Tax Rate
In 2010, the Company converted certain non-U.S. entities to U.S. entities for U.S. income tax purposes. The lower effective tax rate in 2010 and 2008 is primarily due to tax benefits recognized as a result of “check the box” elections made with respect to certain of the Company's non-US subsidiaries. As a result of the elections, the subsidiaries are treated as flow-through entities for U.S. federal income tax purposes. The restructurings in 2010 resulted in the recording of a deferred tax asset, calculated as the difference between fair market valuations of the subsidiaries compared to the underlying financial statement basis in the assets. The restructuring in 2008 resulted in a significant loss that allowed the Company to recover income taxes paid in prior years.
Percentage depletion allowances (tax deductions for depletion that may exceed the tax basis in mineral reserves) are available under the income tax laws of the United States for operations conducted in the United States or through branches and partnerships owned by U.S. subsidiaries included in the Company's consolidated United States income tax return. The deductions are highly sensitive to the price of gold and other minerals produced by the Company.
Tax expense decreased due to the reduction in income taxes from revised estimates of reserves for uncertain income tax positions recorded in jurisdictions where either the statutes of limitations expired or where uncertain income tax positions were settled.
The reduction in valuation allowances in 2010 and 2009 are a result of the increase in value of certain marketable securities, and higher forecasted taxable income from certain mining operations caused by the increase in the average price of gold and the realization of capital loss benefits. In addition, $44 of the valuation allowance, when recognized, will not reduce the Company's effective tax rate, but will be recorded directly to equity. The valuation allowance remaining at the end of 2010 primarily is attributable to non-U.S. subsidiaries tax loss carryforwards.
In the fourth quarter of 2010, the Company reclassified certain income based state and provincial taxes from Costs applicable to sales to Income and mining tax expense. Tax expense increased due to the inclusion of such taxes as Income and mining tax expense. The reclassification resulted in $33, $27 and $27 (net of federal benefit) increases to income and mining taxes for 2010, 2009 and 2008, respectively.
Other
Newmont intends to indefinitely reinvest earnings from certain foreign operations. Accordingly, U.S. and non-U.S. income and withholding taxes for which deferred taxes might otherwise be required, have not been provided on a cumulative amount of temporary differences (including, for this purpose, any difference between the tax basis in the stock of a consolidated subsidiary and the amount of the subsidiary's net equity determined for financial reporting purposes) related to investments in foreign subsidiaries of approximately $7 and $117 at December 31, 2010 and 2009, respectively. The decrease shown above is due to the change in the Company's assertion regarding unremitted earnings that resulted from the conversion of non-U.S. entities to U.S. entities in 2010. As such, deferred taxes are now being provided for the foreign operations included in the restructuring.
Company's Unrecognized Tax Benefits
At December 31, 2010, 2009 and 2008, the Company had $116, $130 and $181 of total gross unrecognized tax benefits, respectively. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
2010 | 2009 | 2008 | |||||||||
Total amount of gross unrecognized tax benefits at | |||||||||||
beginning of year | $ | 130 | $ | 181 | $ | 230 | |||||
Additions for tax positions of prior years | 3 | (21) | 29 | ||||||||
Additions for tax positions of current year | - | 3 | 50 | ||||||||
Reductions due to settlements with taxing authorities | (9) | (27) | (57) | ||||||||
Reductions due to lapse of statute of limitations | (8) | (6) | (71) | ||||||||
Total amount of gross unrecognized tax benefits at end of | |||||||||||
year | $ | 116 | $ | 130 | $ | 181 |
At December 31, 2010, 2009 and 2008, $45, $63 and $116, respectively, represents the amount of unrecognized tax benefits that, if recognized, would impact the Company's effective income tax rate.
The Company operates in numerous countries around the world and accordingly it is subject to, and pays annual income taxes under, the various income tax regimes in the countries in which it operates. Some of these tax regimes are defined by contractual agreements with the local government, and others are defined by the general corporate income tax laws of the country. The Company has historically filed, and continues to file, all required income tax returns and paid the taxes reasonably determined to be due. The tax rules and regulations in many countries are highly complex and subject to interpretation. From time to time, the Company is subject to a review of its historic income tax filings and in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain rules to the Company's business conducted within the country involved.
On June 25, 2008, the United States Tax Court issued an opinion for Santa Fe Pacific Gold Company and Subsidiaries ("Santa Fe"), by and through its successor in interest, Newmont USA Limited, a member of the Newmont Mining Corporation affiliated group. The Tax Court issued the ruling for the tax years 1994 through 1997, which were years prior to Newmont's acquisition of Santa Fe. The Tax Court ruled unfavorably on certain issues relating to the method in which Santa Fe was calculating adjustments related to percentage depletion in its Alternative Minimum Tax calculation. On April 27, 2009, the United States Tax Court issued a decision in favor of Santa Fe, with respect to the $65 million Homestake break-up fee deducted by Santa Fe in tax year 1997. Following procedural rules, the Internal Revenue Service was given 90 days from the date the decision was entered in which to file an appeal. The entry of decision was made on July 16, 2009. The Internal Revenue Service did not file an appeal, and as a result, as of October 15, 2009 the decision stands. The result of this decision resulted in overpayments for each of the tax years 1994 through 1997. The Company has adjusted the unrecognized tax benefits accordingly.
In 2010, PTNNT, the Company's partially owned subsidiary in Indonesia, received a final tax assessment from the Indonesian Tax Office. Although required to pay $132 (of which, $119 related to corporate income tax matters) of tax and penalties upon receipt of the tax assessment, PTNNT intends to vigorously defend its positions through all processes available to it. PTNNT believes it is more likely than not that it will prevail based on prior experience and therefore recorded a corresponding receivable in the third quarter.
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. Federal, state and local, and non-U.S. income tax examinations by tax authorities for years before 2005. As a result of (i) statute of limitations that will begin to expire within the next 12 months in various jurisdictions, and (ii) possible settlements of audit-related issues with taxing authorities in various jurisdictions with respect to which none of the issues are individually significant, the Company believes that it is reasonably possible that the total amount of its net unrecognized income tax benefits will decrease between $1 to $3 in the next 12 months.
The Company's continuing practice is to recognize interest and/or penalties related to unrecognized tax benefits as part of its income and mining tax expense. At December 31, 2010 and 2009, the total amount of accrued income-tax-related interest and penalties included in the Consolidated Balance Sheets was $10 and $13, respectively. During 2010, the Company released through the Statements of Consolidated Income $4 of interest and penalties. During 2009 and 2008, the Company accrued through the Statements of Consolidated Income an additional $9 and $31 of interest and penalties.
Tax Loss Carryforwards, Foreign Tax Credits, and AMT Credits
At December 31, 2010 and 2009, the Company had (i) $1,220 and $1,213 of net operating loss carry forwards, respectively; and (ii) $168 and $279 of tax credit carry forwards, respectively. At December 31, 2010 and 2009, $857 and $1,020, respectively, of net operating loss carry forwards are attributable to operations in Australia, Ghana and France for which current tax law provides no expiration period. The remaining net operating loss carryforwards expire at various dates through 2030. Valuation allowances have been recorded on net operating loss carryforwards where the Company believes based on the available evidence, it is more likely than not that the net operating losses will not be realized.
Tax credit carry forwards for 2010 and 2009 of $53 and $158 consist of foreign tax credits available in the United States; substantially all such credits not utilized will expire at the end of 2018. Other credit carry forwards at the end of 2010 and 2009 in the amounts of $115 and $121, respectively, represent alternative minimum tax credits attributable to the Company's U.S. operations for which the current tax law provides no period of expiration.
Differences in tax rates and other foreign income tax law variations make the ability to fully utilize all available foreign income tax credits on a year-by-year basis highly dependent on the price of the gold and copper produced by the Company and the costs of production, since lower prices or higher costs can result in having insufficient sources of taxable income in the United States to utilize all available foreign tax credits. Such credits have limited carry back and carry forward periods and can only be used to reduce the United States income tax imposed on foreign earnings included in the annual United States consolidated income tax return.
|
NOTE 11 EQUITY INCOME (LOSS) OF AFFILIATES | ||||||||||
Years Ended December 31, | ||||||||||
2010 | 2009 | 2008 | ||||||||
AGR Matthey Joint Venture | $ | 3 | $ | 5 | $ | (2) | ||||
Regis Resources Ltd. | - | - | (3) | |||||||
Minera La Zanja S.R.L. | 10 | (4) | - | |||||||
Euronimba Ltd. | (10) | (17) | - | |||||||
$ | 3 | $ | (16) | $ | (5) |
AGR Matthey Joint Venture
The AGR Matthey Joint Venture (“AGR”), a gold refinery, in which Newmont held a 40% interest, was dissolved on March 30, 2010. Newmont received consideration of $14 from the dissolution and recorded a gain of $6 during 2010. Newmont received dividends of $7 and $2 during 2010 and 2009, respectively, from its interests in AGR. See also Note 26 for details of Newmont's transactions with AGR.
Regis Resources Ltd.
Prior to December 2009, Newmont held a 23.15% interest in Regis Resources Ltd. (“Regis Resources”). On December 22, 2009, Regis Resources issued common shares through a rights issue. As a result, Newmont's ownership interest in Regis Resources was diluted and the Company discontinued equity accounting.
Minera La Zanja S.R.L.
Newmont holds a 46.94% interest in Minera La Zanja, S.R.L. (“La Zanja”), a gold project near the city of Cajamarca, Peru. The remaining interests are held by Compañia de Minas Buenaventura, S.A.A. (“Buenaventura”). The mine commenced operations in September 2010 and is operated by Buenaventura.
Euronimba Ltd.
Newmont holds a 43.50% interest in Euronimba Ltd. (“Euronimba”), with the remaining interests held by BHP Billiton (43.50%) and Areva (13%). Euronimba owns 95% of the Nimba iron ore project located in the Republic of Guinea which is in the early stages of development.
|
NOTE 12 DISCONTINUED OPERATIONS
Discontinued operations include Kori Kollo sold in July 2009 and various other operations sold to third parties.
In December 2010, the Company recognized a $28 charge, net of tax benefits, for legal claims related to historic operations previously sold to third parties.
In July 2009, the Company sold its interest in Kori Kollo in Bolivia. As part of the transaction, a reclamation trust fund was established with the proceeds to be made available exclusively to pay for closure and reclamation costs when operations eventually cease. The Company recognized a $16 charge in 2009, net of tax benefits, related to the sale.
Newmont has accounted for these dispositions in accordance with accounting guidance for the impairment or disposal of long-lived assets. The Company has reclassified the income statement results from the historical presentation to Income (loss) from discontinued operations in the Statements of Consolidated Income for all periods presented. The Statements of Consolidated Cash Flows have been reclassified for discontinued operations for all periods presented.
The following table details selected financial information included in the Income (loss) from discontinued operations in the Statements of Consolidated Income:
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Sales | $ | - | $ | 32 | $ | 75 | |||||
Income (loss) from operations: | |||||||||||
Kori Kollo | $ | - | $ | 1 | $ | (9) | |||||
Other | - | - | 6 | ||||||||
- | 1 | (3) | |||||||||
Non-operating gain (loss) | (40) | (44) | 1 | ||||||||
Pre-tax income (loss) | (40) | (43) | (2) | ||||||||
Income tax benefit | 12 | 27 | 15 | ||||||||
Income (loss) from discontinued operations | $ | (28) | $ | (16) | $ | 13 |
The following table details selected financial information included in Net cash provided from (used in) discontinued operations and investing activities and financing activities of discontinued operations:
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Net cash provided from (used in) discontinued operations: | |||||||||||
Income (loss) from discontinued operations | $ | (28) | $ | (16) | $ | 13 | |||||
Amortization | - | 3 | 9 | ||||||||
Deferred income taxes | (12) | (28) | 4 | ||||||||
Impairment of assets held for sale | - | 44 | - | ||||||||
Other operating adjustments and write-downs | - | 7 | 19 | ||||||||
Increase (decrease) in net operating liabilities | 27 | 23 | (149) | ||||||||
$ | (13) | $ | 33 | $ | (104) | ||||||
Net cash used in investing activities of discontinued operations: | |||||||||||
Proceeds from asset sales, net | $ | - | $ | - | $ | (6) | |||||
Additions to property, plant and mine development | - | - | (5) | ||||||||
$ | - | $ | - | $ | (11) | ||||||
Net cash used in financing activities of discontinued operations: | |||||||||||
Repayment of debt | $ | - | $ | (2) | $ | (4) | |||||
$ | - | $ | (2) | $ | (4) |
|
NOTE 13 NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | |||||||||||
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Batu Hijau | $ | 549 | $ | 445 | $ | 98 | |||||
Yanacocha | 292 | 354 | 232 | ||||||||
Other | (2) | (3) | (1) | ||||||||
$ | 839 | $ | 796 | $ | 329 |
In June 2010, PTPI completed the sale of an approximate 2.2% interest in PTNNT to PTIMI. To enable the transaction to proceed, the Company released its rights to the dividends payable on this 2.2% interest and released the security interest in the associated shares. The Company further agreed, however, to advance certain funds to PTIMI to enable it to purchase the interest in exchange for an assignment by PTIMI to the Company of the dividends payable on the 2.2% interest (net of withholding tax), a pledge of the shares as security on the advance, and certain voting rights and obligations. The funds that the Company advanced to PTIMI and which it paid to PTPI for the shares were used by PTPI to reduce its outstanding balance with the Company. Upon completion of this transaction, PTPI requested and was allowed to borrow additional funds under the Company's agreement with PTPI. The Company's economic interest in PTPI's and PTIMI's combined 20% interest in PTNNT remains at 17% and has not changed as a result of these transactions.
In March 2010, the Company (through NTP) completed the sale and transfer of shares for a 7% interest in PTNNT, the Indonesian subsidiary that operates Batu Hijau, to PT Multi Daerah Bersaing (“PTMDB”) in compliance with divestiture obligations under the Contract of Work, reducing NTP's ownership interest to 56% from 63%. In 2009, the Company (through NTP) completed the sale and transfer of shares for a 17% interest in PTNNT to PTMDB in compliance with divestiture obligations under the Contract of Work, reducing NTP's ownership interest to 63% from 80%. The 2010 and 2009 share transfers resulted in gains of approximately $16 (after tax of $33) and $63 (after tax of $115), respectively, that were recorded as Additional paid-in capital. For information on the Batu Hijau Contract of Work and divestiture requirements, see the discussion in Note 31 to the Consolidated Financial Statements.
In December 2009, the Company entered into a transaction with PTPI, whereby the Company agreed to advance certain funds to PTPI in exchange for a pledge of the noncontrolling partner's 20% share of PTNNT dividends, net of withholding tax, and certain voting rights and obligations, and a commitment from PTPI to support the application of Newmont's standards to the operation of the Batu Hijau mine. Based on the transaction with PTPI, the Company recognized an additional 17% effective economic interest in PTNNT.
At December 31, 2010, Newmont had a 48.50% effective economic interest in PTNNT. Based on ASC guidance for variable interest entities, Newmont continues to consolidate PTNNT in its Consolidated Financial Statements.
Newmont has a 51.35% ownership interest in Yanacocha, with the remaining interests held by Compañia de Minas Buenaventura, S.A.A. (43.65%) and the International Finance Corporation (5%).
|
NOTE 15 ACQUISITIONS
On June 25, 2009 the Company completed the acquisition of the remaining 33.33% interest in Boddington from AngloGold Ashanti Australia Limited (“AngloGold”). Consideration for the acquisition consisted of $982 and a contingent royalty capped at $100, equal to 50% of the average realized operating margin (Revenue less Costs applicable to sales on a by-product basis), if any, exceeding $600 per ounce, payable quarterly beginning in the second quarter of 2010 on one-third of gold sales from Boddington. At the acquisition date, the Company estimated the fair value of the contingent consideration at $62. In connection with the acquisition, the Company incurred $67 of transaction costs in 2009 of which $15 of these costs were paid at December 31, 2010.
At December 31, 2010 and December 31, 2009, the fair value of the contingent consideration was valued to approximately $83 and $85, respectively. Changes to the estimated fair value resulting from periodic revaluations are recorded to Other expense, net. During 2010, the Company paid $4 in cash to AngloGold related to the contingent consideration. The range of remaining undiscounted amounts the Company could pay is between $0 and $96.
The Boddington purchase price allocation based on the estimated fair values of assets acquired and liabilities assumed was as follows:
Assets: | |||||
Cash | $ | 1 | |||
Property, plant and mine development, net | 1,073 | ||||
Inventories and stockpiles | 7 | ||||
Other assets | 11 | ||||
$ | 1,092 | ||||
Liabilities: | |||||
Accrued liabilities | $ | 33 | |||
Reclamation liabilities | 15 | ||||
48 | |||||
Net assets acquired | $ | 1,044 |
During 2008, the Company paid $318 million to complete the 2007 acquisition of Miramar Mining Corporation and the Hope Bay project.
|
NOTE 16 FAIR VALUE ACCOUNTING
Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
Level 3 Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
The following table sets forth the Company's assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. As required by accounting guidance, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Fair Value at December 31, 2010 | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 2,316 | $ | 2,316 | $ | - | $ | - | |||||||
Marketable equity securities: | |||||||||||||||
Extractive industries | 1,573 | 1,573 | - | - | |||||||||||
Other | 6 | 6 | - | - | |||||||||||
Marketable debt securities: | |||||||||||||||
Asset backed commercial paper | 19 | - | - | 19 | |||||||||||
Corporate | 10 | 10 | - | - | |||||||||||
Auction rate securities | 5 | - | - | 5 | |||||||||||
Trade receivable from provisional copper | 412 | 412 | - | - | |||||||||||
and gold concentrate sales, net | |||||||||||||||
Derivative instruments, net: | |||||||||||||||
Foreign exchange forward contracts | 301 | - | 301 | - | |||||||||||
Diesel forward contracts | 8 | - | 8 | - | |||||||||||
Interest rate swap contracts | 3 | - | 3 | - | |||||||||||
$ | 4,653 | $ | 4,317 | $ | 312 | $ | 24 | ||||||||
Liabilities: | |||||||||||||||
8 5/8% debentures ($222 hedged portion) | $ | 228 | $ | - | $ | 228 | $ | - | |||||||
Boddington contingent consideration | 83 | - | - | 83 | |||||||||||
$ | 311 | $ | - | $ | 228 | $ | 83 |
The Company's cash equivalent instruments are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The cash equivalent instruments that are valued based on quoted market prices in active markets are primarily money market securities and U.S. Treasury securities.
The Company's marketable equity securities are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair value hierarchy. The securities are segregated based on industry. The fair value of the marketable equity securities is calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by the Company.
The Company's marketable debt securities include investments in auction rate securities and asset backed commercial paper. The Company reviews the fair value for auction rate securities and asset backed commercial paper on at least a quarterly basis. The auction rate securities are traded in markets that are not active, trade infrequently and have little price transparency. The Company estimated the fair value of the auction rate securities based on weighted average risk calculations using probabilistic cash flow assumptions. In January 2009, the investments in the Company's asset backed commercial paper were restructured by court order. The restructuring allowed an interest distribution to be made to investors. The Company estimated the fair value of the asset backed commercial paper using a probability of return to each class of notes reflective of information reviewed regarding the separate classes of securities. The auction rate securities and asset backed commercial paper are classified within Level 3 of the fair value hierarchy. The Company's corporate marketable debt securities are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair value hierarchy.
The Company's net trade receivable from provisional copper and gold concentrate sales, subject to final pricing, is valued using quoted market prices based on forward curves and, as such, is classified within Level 1 of the fair value hierarchy.
The Company's derivative instruments are valued using pricing models and the Company generally uses similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility, and correlations of such inputs. The Company's derivatives trade in liquid markets, and as such, model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy.
The Company has fixed to floating swap contracts to hedge a portion of the interest rate risk exposure of its 8 5/8% debentures due May 2011. The hedged portion of the Company's 8 5/8% debentures are valued using pricing models which require inputs, including risk-free interest rates and credit spreads. Because the inputs are derived from observable market data, the hedged portion of the 8 5/8% debentures is classified within Level 2 of the fair value hierarchy.
The Company recorded a contingent consideration liability related to the 2009 acquisition of the final 33.33% interest in Boddington. The value of the contingent consideration was determined using a valuation model which simulates future gold and copper prices and costs applicable to sales to estimate fair value. The contingent consideration liability is classified within Level 3 of the fair value hierarchy. See Note 15.
The table below sets forth a summary of changes in the fair value of the Company's Level 3 financial assets and liabilities for the years ended December 31, 2010:
Auction Rate Securities | Asset Backed Commercial Paper | Total Assets | Boddington Contingent Consideration | Total Liabilities | ||||||||||||||
Balance at beginning of period | $ | 5 | $ | 18 | $ | 23 | $ | 85 | $ | 85 | ||||||||
Unrealized gain | - | 1 | 1 | - | - | |||||||||||||
Revaluation | - | - | - | 2 | 2 | |||||||||||||
Settlements | - | - | - | (4) | (4) | |||||||||||||
Balance at end of period | $ | 5 | $ | 19 | $ | 24 | $ | 83 | $ | 83 |
The revaluation on the Boddington contingent consideration liability of $2 was recorded in Other expense, net.
Unrealized gains of $1 for 2010 were included in Accumulated other comprehensive income as a result of changes in C$ exchange rates from December 31, 2009. At December 31, 2010, the assets and liabilities classified within Level 3 of the fair value hierarchy represent 1% and 27% of the total assets and liabilities measured at fair value.
|
NOTE 17 DERIVATIVE INSTRUMENTS
The Company's strategy is to provide shareholders with leverage to changes in gold and copper prices by selling its production at spot market prices. Consequently, the Company does not hedge its gold and copper sales. Newmont continues to manage certain risks associated with commodity input costs, interest rates and foreign currencies using the derivative market. All of the cash flow and fair value derivative instruments described below were transacted for risk management purposes and qualify as hedging instruments. The maximum period over which hedged transactions are expected to occur is five years.
Cash Flow Hedges
The foreign currency and diesel contracts are designated as cash flow hedges, and as such, the effective portion of unrealized changes in market value have been recorded in Accumulated other comprehensive income and are reclassified to income during the period in which the hedged transaction affects earnings. Gains and losses from hedge ineffectiveness are recognized in current earnings.
Foreign Currency Contracts
Newmont utilizes foreign currency contracts to reduce the variability of the US dollar amount of forecasted foreign currency expenditures caused by changes in exchange rates. Newmont hedges a portion of the Company's A$ and NZ$ denominated operating expenditures which results in a blended rate realized each period. The hedging instruments are fixed forward contracts with expiration dates ranging up to five years from the date of issue. The principal hedging objective is reduction in the volatility of realized period-on-period $/A$ and $/NZ$ rates, respectively.
Newmont had the following foreign currency derivative contracts outstanding at December 31, 2010:
Expected Maturity Date | |||||||||||||||||||||
Total/ | |||||||||||||||||||||
2011 | 2012 | 2013 | 2014 | 2015 | Average | ||||||||||||||||
A$ Fixed Forward Contracts: | |||||||||||||||||||||
A$ notional (millions) | 1,026 | 631 | 314 | 221 | 99 | 2,291 | |||||||||||||||
Average rate ($/A$) | 0.82 | 0.84 | 0.84 | 0.83 | 0.80 | 0.83 | |||||||||||||||
Expected hedge ratio | 72 | % | 45 | % | 22 | % | 17 | % | 8 | % | 34 | % | |||||||||
NZ$ Fixed Forward Contracts: | |||||||||||||||||||||
NZ$ notional (millions) | 67 | 23 | - | - | - | 90 | |||||||||||||||
Average rate ($/NZ$) | 0.69 | 0.69 | - | - | - | 0.69 | |||||||||||||||
Expected hedge ratio | 57 | % | 22 | % | - | % | - | % | - | % | 40 | % |
Diesel Fixed Forward Contracts
Newmont hedges a portion of its operating cost exposure related to diesel consumed at its Nevada operations to reduce the variability in realized diesel prices. The hedging instruments consist of a series of financially settled fixed forward contracts with expiration dates ranging up to two years from the date of issue.
Newmont had the following diesel derivative contracts outstanding at December 31, 2010:
Expected Maturity Date | ||||||||||||
Total/ | ||||||||||||
2011 | 2012 | Average | ||||||||||
Diesel Fixed Forward Contracts: | ||||||||||||
Diesel gallons (millions) | 21 | 7 | 28 | |||||||||
Average rate ($/gallon) | 2.28 | 2.44 | 2.32 | |||||||||
Expected Nevada hedge ratio | 50 | % | 18 | % | 34 | % |
Treasury Rate Lock Contracts
In connection with the 2019 and 2039 notes issued in September 2009, Newmont acquired treasury rate lock contracts to reduce the variability of the proceeds realized from the bond issuances. The treasury rate locks resulted in $6 and $5 unrealized gains for the 2019 and 2039 notes, respectively. The Company previously acquired treasury rate locks in connection with the issuance of the 2035 notes that resulted in a $10 unrealized loss. The gains/losses from these contracts are recognized in Interest expense, net over the terms of the respective notes.
Fair Value Hedges
Interest Rate Swap Contracts
At December 31, 2010, Newmont had $222 fixed to floating swap contracts designated as a hedge against its 8 5/8% debentures due 2011. The interest rate swap contracts assist in managing the Company's mix of fixed and floating rate debt. Under the hedge contract terms, Newmont receives fixed-rate interest payments at 8.63% and pays floating-rate interest amounts based on periodic London Interbank Offered Rate (“LIBOR”) settings plus a spread, ranging from 2.60% to 7.63%. The interest rate swap contracts were designated as fair value hedges and changes in fair value have been recorded in income in each period, consistent with recording changes to the mark-to-market value of the underlying hedged liability in income.
Derivative Instrument Fair Values
Newmont had the following derivative instruments designated as hedges at December 31, 2010 and December 31, 2009:
Fair Values of Derivative Instruments | ||||||||||||||
At December 31, 2010 | ||||||||||||||
Other Current Assets | Other Long-Term Assets | Other Current Liabilities | Other Long-Term Liabilities | |||||||||||
Foreign currency exchange contracts: | ||||||||||||||
A$ fixed forward contracts | $ | 181 | $ | 114 | $ | - | $ | - | ||||||
NZ$ fixed forward contracts | 5 | 1 | - | - | ||||||||||
Diesel fixed forward contracts | 7 | 1 | - | - | ||||||||||
Interest rate swap contracts | 3 | - | - | - | ||||||||||
Total derivative instruments (Note 21) | $ | 196 | $ | 116 | $ | - | $ | - | ||||||
Fair Values of Derivative Instruments | ||||||||||||||
At December 31, 2009 | ||||||||||||||
Other Current Assets | Other Long-Term Assets | Other Current Liabilities | Other Long-Term Liabilities | |||||||||||
Foreign currency exchange contracts: | ||||||||||||||
A$ fixed forward contracts | $ | 78 | $ | 53 | $ | - | $ | 1 | ||||||
NZ$ fixed forward contracts | 5 | 1 | - | - | ||||||||||
IDR fixed forward contracts | 1 | - | - | - | ||||||||||
Diesel fixed forward contracts | 5 | 1 | - | - | ||||||||||
Interest rate swap contracts | 3 | 4 | - | - | ||||||||||
Total derivative instruments (Note 21) | $ | 92 | $ | 59 | $ | - | $ | 1 |
The following tables show the location and amount of gains (losses) reported in the Company's Consolidated Financial Statements related to the Company's cash flow and fair value hedges and the gains (losses) recorded for the hedged item related to the fair value hedges.
Foreign Currency Exchange Contracts | Diesel Forward Contracts | |||||||||||||||||||||||||||
For the years ended December 31, | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||||||
Cash flow hedging relationships: | ||||||||||||||||||||||||||||
Gain (loss) recognized in other comprehensive income (effective portion) | $ | 287 | $ | 245 | $ | (166) | $ | 6 | $ | 7 | $ | (18) | ||||||||||||||||
(1)? | $ | 92 | $ | (6) | $ | (17) | $ | 4 | $ | (11) | $ | (4) | ||||||||||||||||
Treasury Rate Lock Contracts | ||||||||||||||||||||||||||||
2010 | 2009 | 2008 | ||||||||||||||||||||||||||
Cash flow hedging relationships: | ||||||||||||||||||||||||||||
Gain (loss) recognized in other comprehensive income (effective portion) (2)? | $ | - | $ | 11 | $ | - |
(1) The gain (loss) for the effective portion of foreign currency exchange and diesel cash flow hedges reclassified from Accumulated other comprehensive income is included in Costs applicable to sales.
(2) The gain for the effective portion of treasury rate lock cash flow hedges reclassified from Accumulated other comprehensive income is recorded in Interest expense, net.
The amount to be reclassified from Accumulated other comprehensive income, net of tax to income during the next 12 months is a gain of approximately $135.
Interest Rate Swap Contracts | 8 5/8% Debentures (Hedged Portion) | |||||||||||||||||
For the years ended December 31, | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||
Fair value hedging relationships: | ||||||||||||||||||
Gain (loss) recognized in income (effective portion) (1)? | $ | 6 | $ | 4 | $ | 2 | $ | - | $ | (1) | $ | (2) | ||||||
Gain (loss) recognized in income (ineffective portion) (2)? | $ | (4) | $ | (3) | $ | 4 | $ | 2 | $ | (3) | $ | 6 |
(1) The gain (loss) recognized for the effective portion of fair value hedges and the underlying hedged debt is included in Interest expense, net.
(2) The ineffective portion recognized for fair value hedges and the underlying hedged debt is included in Other income, net.
Provisional Copper and Gold Sales
The Company's provisional copper and gold sales contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of the gold and copper concentrates at the prevailing indices' prices at the time of sale. The embedded derivative, which does not qualify for hedge accounting, is marked to market through earnings each period prior to final settlement.
The average LME copper price was $3.43 per pound during 2010, compared with the Company's recorded average provisional price of $3.42 before mark-to-market gains and treatment and refining charges. During 2010, increasing copper prices resulted in a provisional pricing mark-to-market gain of $120 ($0.22 per pound). At December 31, 2010, Newmont had copper sales of 111 million pounds priced at an average of $4.40 per pound, subject to final pricing over the next several months.
The average London P.M. fix for gold was $1,225 per ounce during 2010, compared with the Company's recorded average provisional price of $1,224 per ounce before mark-to-market gains and treatment and refining charges. During 2010, increasing gold prices resulted in a provisional pricing mark-to-market gain of $41 ($7 per ounce). At December 31, 2010, Newmont had gold sales of 105,000 ounces priced at an average of $1,411 per ounce, subject to final pricing over the next several months.
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NOTE 18 INVESTMENTS | ||||||||||||||||
At December 31, 2010 | ||||||||||||||||
Cost/Equity | Unrealized | Fair/Equity | ||||||||||||||
Basis | Gain | Loss | Basis | |||||||||||||
Current: | ||||||||||||||||
Marketable Equity Securities: | ||||||||||||||||
New Gold Inc. | 5 | 54 | - | 59 | ||||||||||||
Other | 19 | 35 | - | 54 | ||||||||||||
$ | 24 | $ | 89 | $ | - | $ | 113 | |||||||||
Long-term: | ||||||||||||||||
Marketable Debt Securities: | ||||||||||||||||
Asset backed commercial paper | $ | 25 | $ | - | $ | (6) | $ | 19 | ||||||||
Auction rate securities | 7 | - | (2) | 5 | ||||||||||||
Corporate | 7 | 3 | - | 10 | ||||||||||||
39 | 3 | (8) | 34 | |||||||||||||
Marketable Equity Securities: | ||||||||||||||||
Canadian Oil Sands Trust | 308 | 508 | - | 816 | ||||||||||||
Gabriel Resources Ltd. | 78 | 325 | - | 403 | ||||||||||||
Regis Resources Ltd. | 23 | 148 | - | 171 | ||||||||||||
Other | 39 | 37 | - | 76 | ||||||||||||
448 | 1,018 | - | 1,466 | |||||||||||||
Other investments, at cost | 11 | - | - | 11 | ||||||||||||
Investment in Affiliates: | ||||||||||||||||
La Zanja | 57 | - | - | 57 | ||||||||||||
$ | 555 | $ | 1,021 | $ | (8) | $ | 1,568 | |||||||||
At December 31, 2009 | ||||||||||||||||
Cost/Equity | Unrealized | Fair/Equity | ||||||||||||||
Basis | Gain | Loss | Basis | |||||||||||||
Current: | ||||||||||||||||
Marketable Equity Securities: | ||||||||||||||||
Regis Resources Ltd. | $ | 5 | $ | 29 | $ | - | $ | 34 | ||||||||
Other | 10 | 12 | - | 22 | ||||||||||||
$ | 15 | $ | 41 | $ | - | $ | 56 | |||||||||
Long-term: | ||||||||||||||||
Marketable Debt Securities: | ||||||||||||||||
Asset backed commercial paper | $ | 24 | $ | - | $ | (6) | $ | 18 | ||||||||
Auction rate securities | 7 | - | (2) | 5 | ||||||||||||
Corporate | 8 | 2 | - | 10 | ||||||||||||
39 | 2 | (8) | 33 | |||||||||||||
Marketable Equity Securities: | ||||||||||||||||
Canadian Oil Sands Trust | 292 | 584 | - | 876 | ||||||||||||
Gabriel Resources Ltd. | 74 | 136 | - | 210 | ||||||||||||
Other | 15 | 18 | - | 33 | ||||||||||||
381 | 738 | - | 1,119 | |||||||||||||
Other investments, at cost | 6 | - | - | 6 | ||||||||||||
Investment in Affiliates: | ||||||||||||||||
AGR Matthey Joint Venture | 20 | - | - | 20 | ||||||||||||
La Zanja | 8 | - | - | 8 | ||||||||||||
$ | 454 | $ | 740 | $ | (8) | $ | 1,186 |
Included in Investments at December 31, 2010 and 2009 are $10 and $10 of long-term marketable debt securities, respectively, and $6 and $5 long-term marketable equity securities, respectively, which are legally pledged for purposes of settling asset retirement obligations related to the San Jose Reservoir in Yanacocha.
On December 21, 2010 Newmont exercised 6 million warrants of New Gold Inc. and received 6 million New Gold Inc. shares for consideration of $5.
In March 2010, Regis Resources issued A$10 interest free convertible notes to Newmont which were repayable by December 31, 2012 and 5 million options. On September 30, 2010, Newmont accepted the offer to terminate its equity participation right on all Regis Resources tenements in return for 9 million Regis Resources shares upon conversion of the interest free convertible notes. This conversion resulted in a gain of approximately $5. On October 26, 2010, Newmont exercised the options and received 5 million Regis Resources shares for consideration of $4.
During 2010, the Company purchased $15 and exercised warrants for $4 of other marketable equity securities. During 2009, the Company purchased $5 of Regis Resources shares.
AGR, in which the Company held a 40% equity interest, was dissolved on March 30, 2010. The Company received consideration of $14 from the dissolution and recorded a gain of $6 in 2010.
During 2010 and 2009, the Company recognized impairments for other-than-temporary declines in value of $1 and $6, respectively, for other marketable equity securities.
The following tables present the gross unrealized losses and fair value of the Company's investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by length of time that the individual securities have been in a continuous unrealized loss position:
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||
At December 31, 2010 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||
Asset backed commercial paper | $ | - | $ | - | $ | 19 | $ | 6 | $ | 19 | $ | 6 | |||||
Auction rate securities | - | - | 5 | 2 | 5 | 2 | |||||||||||
$ | - | $ | - | $ | 24 | $ | 8 | $ | 24 | $ | 8 | ||||||
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||
At December 31, 2009 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||
Asset backed commercial paper | $ | - | $ | - | $ | 18 | $ | 6 | $ | 18 | $ | 6 | |||||
Auction rate securities | - | - | 5 | 2 | 5 | 2 | |||||||||||
$ | - | $ | - | $ | 23 | $ | 8 | $ | 23 | $ | 8 |
The unrealized loss of $8 at December 31, 2010 and 2009 relate to the Company's investments in asset backed commercial paper and auction rate securities as listed in the tables above. While the fair values of these investments are below their respective cost, the Company views these declines as temporary. The Company intends to hold its investment in auction rate securities and asset backed commercial paper until maturity or such time that the market recovers and therefore considers these losses temporary.
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NOTE 19 INVENTORIES | ||||||||
At December 31, | ||||||||
2010 | 2009 | |||||||
In-process | $ | 142 | $ | 80 | ||||
Concentrate | 111 | 10 | ||||||
Precious metals | 4 | 9 | ||||||
Materials, supplies and other | 401 | 394 | ||||||
$ | 658 | $ | 493 |
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NOTE 20 STOCKPILES AND ORE ON LEACH PADS | ||||||||
At December 31, | ||||||||
2010 | 2009 | |||||||
Current: | ||||||||
Stockpiles | $ | 389 | $ | 206 | ||||
Ore on leach pads | 228 | 197 | ||||||
$ | 617 | $ | 403 | |||||
Long-term: | ||||||||
Stockpiles | $ | 1,397 | $ | 1,181 | ||||
Ore on leach pads | 360 | 321 | ||||||
$ | 1,757 | $ | 1,502 |
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NOTE 21 OTHER ASSETS | ||||||||
At December 31, | ||||||||
2010 | 2009 | |||||||
Other current assets: | ||||||||
Refinery metal inventory and receivable | $ | 617 | $ | 671 | ||||
Derivative instruments | 196 | 92 | ||||||
Other prepaid assets | 65 | 70 | ||||||
Other | 84 | 67 | ||||||
$ | 962 | $ | 900 | |||||
Other long-term assets: | ||||||||
Goodwill | $ | 188 | $ | 188 | ||||
Income tax receivable | 119 | - | ||||||
Derivative instruments | 116 | 59 | ||||||
Intangible assets | 91 | 29 | ||||||
Debt issuance costs | 39 | 50 | ||||||
Restricted cash | 25 | 70 | ||||||
Other receivables | 19 | 16 | ||||||
Other | 144 | 70 | ||||||
$ | 741 | $ | 482 |
|
NOTE 22 PROPERTY, PLANT AND MINE DEVELOPMENT | |||||||||||||||||||||
At December 31, 2010 | At December 31, 2009 | ||||||||||||||||||||
Depreciable | Accumulated | Net Book | Accumulated | Net Book | |||||||||||||||||
Life | Cost | Amortization | Value | Cost | Amortization | Value | |||||||||||||||
(in years) | |||||||||||||||||||||
Land | — | $ | 118 | $ | - | $ | 118 | $ | 111 | $ | - | $ | 111 | ||||||||
Facilities and equipment | 1- | 27 | 12,424 | (5,460) | 6,964 | 12,099 | (4,816) | 7,283 | |||||||||||||
Mine development | 1- | 27 | 3,217 | (1,445) | 1,772 | 2,696 | (1,181) | 1,515 | |||||||||||||
Mineral interests | 1- | 27 | 3,463 | (667) | 2,796 | 3,380 | (608) | 2,772 | |||||||||||||
Asset retirement cost | 1- | 27 | 638 | (238) | 400 | 462 | (210) | 252 | |||||||||||||
Construction-in-progress | — | 857 | - | 857 | 437 | - | 437 | ||||||||||||||
$ | 20,717 | $ | (7,810) | $ | 12,907 | $ | 19,185 | $ | (6,815) | $ | 12,370 | ||||||||||
Leased assets included above in facilities and equipment | 2- | 25 | $ | 421 | $ | (289) | $ | 132 | $ | 421 | $ | (275) | $ | 146 | |||||||
At December 31, 2010 | At December 31, 2009 | ||||||||||||||||||||
Mineral Interests | Gross | Gross | |||||||||||||||||||
Amortization | Carrying | Accumulated | Net Book | Carrying | Accumulated | Net Book | |||||||||||||||
Period | Value | Amortization | Value | Value | Amortization | Value | |||||||||||||||
(in years) | |||||||||||||||||||||
Production stage | 1- | 27 | $ | 1,235 | $ | (660) | $ | 575 | $ | 1,207 | $ | (601) | $ | 606 | |||||||
Development stage | — | 149 | - | 149 | 155 | - | 155 | ||||||||||||||
Exploration stage | 1- | 27 | 2,079 | (7) | 2,072 | 2,018 | (7) | 2,011 | |||||||||||||
$ | 3,463 | $ | (667) | $ | 2,796 | $ | 3,380 | $ | (608) | $ | 2,772 |
Construction-in-progress at December 31, 2010 of $857 included $266 at South America related to Conga and infrastructure at Yanacocha, including a water treatment plant, $252 at North America related to tailings dam expansion and processing facility improvements in Nevada and other infrastructure at Hope Bay and Nevada, $222 at Asia Pacific related to tailings dam expansion at Boddington and other infrastructure at Boddington, Tanami and Batu Hijau and $84 at Africa related to the Akyem project and infrastructure at Ahafo.
Construction-in-progress at December 31, 2009 of $437 included $168 at Africa related to the Akyem project, the development of Amoma and other infrastructure at Ahafo, $103 at Asia Pacific related to Boddington and infrastructure at Tanami, $85 at South America related to project infrastructure, a water treatment plant and a tailings pipeline and $65 at North America related to tailings dam expansion at Twin Creeks and an underground truck shop and equipment purchases at Carlin.
Write-down of property, plant and mine development totaled $6, $7 and $137 for 2010, 2009 and 2008, respectively. The 2010 write-down primarily related to the disposal of assets in North America and Asia Pacific. The 2009 write-down primarily related to the disposal of assets in Asia Pacific and South America. The 2008 write-down primarily related to the impairment of mineral interests at the Fort a la Corne JV in North America and the disposal of assets in North America and Asia Pacific.
|
NOTE 23 DEBT | ||||||||||||
At December 31, 2010 | At December 31, 2009 | |||||||||||
Current | Non-Current | Current | Non-Current | |||||||||
Sale-leaseback of refractory ore treatment plant | $ | 30 | $ | 134 | $ | 24 | $ | 164 | ||||
8 5/8% debentures, net of discount (due 2011) | 217 | - | - | 218 | ||||||||
2012 convertible senior notes, net of discount | - | 488 | - | 463 | ||||||||
2014 convertible senior notes, net of discount | - | 489 | - | 468 | ||||||||
2017 convertible senior notes, net of discount | - | 434 | - | 417 | ||||||||
2019 senior notes, net of discount | - | 896 | - | 896 | ||||||||
2035 senior notes, net of discount | - | 598 | - | 597 | ||||||||
2039 senior notes, net of discount | - | 1,087 | - | 1,087 | ||||||||
PTNNT project financing facility | - | - | 87 | 133 | ||||||||
Yanacocha credit facility and senior notes | - | - | 22 | 140 | ||||||||
Ahafo project facility | 10 | 55 | 10 | 65 | ||||||||
Other capital leases | 2 | 1 | 14 | 4 | ||||||||
$ | 259 | $ | 4,182 | $ | 157 | $ | 4,652 |
Scheduled minimum debt repayments are $259 in 2011, $559 in 2012, $42 in 2013, $533 in 2014, $18 in 2015 and $3,030 thereafter.
Sale-Leaseback of Refractory Ore Treatment Plant
In September 1994, the Company entered into a sale and leaseback agreement for its refractory ore treatment plant located in Carlin, Nevada. The lease term is 21 years and aggregate future minimum lease payments, which include interest, were $190 and $226 at December 31, 2010 and 2009, respectively. Future minimum lease payments are $39 in 2011, $70 in 2012, $36 in 2013, $36 in 2014 and $9 in 2015. The lease includes purchase options during and at the end of the lease at predetermined prices. The interest rate on this sale-leaseback transaction is 6.36%. In connection with this transaction, the Company entered into certain interest rate hedging contracts that were settled for a gain of $11, which is recognized as a reduction of interest expense over the term of the lease. Including this gain, the effective interest rate on the borrowing is 6.15%. The related asset is specialized, therefore it is not practicable to estimate the fair value of this debt.
8 5/8% Senior Notes
Newmont has outstanding uncollateralized senior notes with a principal amount of $223 due May 2011 bearing an annual interest rate of 8.63%. Interest is paid semi-annually in May and November and the senior notes are redeemable prior to maturity under certain conditions. Newmont has contracts to hedge the interest rate risk exposure on $222 of these senior notes. The Company receives fixed-rate interest payments at 8.63% and pays floating-rate interest based on periodic London Interbank Offered Rate (“LIBOR”) settings plus a spread, ranging from 2.60% to 7.63% (see Note 17). Using prevailing interest rates on similar instruments, the estimated fair value of these senior notes was $228 and $242 at December 31, 2010, and 2009, respectively. The foregoing fair value estimate was prepared with the assistance of an independent third party and may or may not reflect the actual trading value of this debt.
Corporate Revolving Credit Facility
The Company has an uncollateralized $2,000 revolving credit facility with a syndicate of commercial banks, which matures in April 2012. The facility contains a letter of credit sub-facility. Interest rates and facility fees vary based on the credit ratings of the Company's senior, uncollateralized, long-term debt. Borrowings under the facilities bear interest at an annual interest rate of LIBOR plus a margin of 0.28% or the lead bank's prime interest rate. The margin adjusts as the Company's credit rating changes. Facility fees accrue at an annual rate of 0.07% of the aggregate commitments. The Company also pays a utilization fee of 0.05% on the amount of revolving credit loans and letters of credit outstanding under the facility for each day on which the sum of such loans and letters of credit exceed 50% of the commitments under the facility. There was $153 and $452 outstanding under the letter of credit sub-facility at December 31, 2010 and 2009, respectively. At December 31, 2010 and 2009, we had no borrowings outstanding under the facility.
2012 Convertible Senior Notes
In February 2009, the Company issued $518 of uncollateralized convertible senior notes maturing on February 15, 2012 for net proceeds of $504. The notes pay interest semi-annually at a rate of 3.0% per annum and the effective interest rate is 8.5%. The notes are convertible, at the holder's option, equivalent to a conversion price of $46.18 per share of common stock. Upon conversion, the principle amount and all accrued interest will be repaid in cash and any conversion premium will be settled in shares of our common stock or, at our election, cash or any combination of cash and shares of our common stock. When the conversion premium is dilutive to the Company's earnings per share (Newmont's share price exceeds $46.18) the shares are included in the computation of diluted income per common share. The Company is not entitled to redeem the notes prior to their stated maturity dates. Using prevailing interest rates on similar instruments, the estimated fair value of these senior notes was $668 and $580 at December 31, 2010 and 2009, respectively. The foregoing fair value estimates were prepared with the assistance of an independent third party and may or may not reflect the actual trading value of this debt.
2014 and 2017 Convertible Senior Notes
In July 2007, the Company issued $1,150 uncollateralized convertible senior notes due in 2014 and 2017, each with a principal amount of $575 for net proceeds of $1,126. The 2014 notes, maturing on July 15, 2014, pay interest semi-annually at a rate of 1.25% per annum, and the 2017 notes, maturing on July 15, 2017, pay interest semi-annually at a rate of 1.63% per annum. The effective interest rates are 6.0% and 6.25% for the 2014 and 2017 notes, respectively. The notes are convertible, at the holder's option, at a conversion price of $46.13 per share of common stock. Upon conversion, the principle amount and all accrued interest will be repaid in cash and any conversion premium will be settled in shares of our common stock or, at our election, cash or any combination of cash and shares of our common stock. In connection with the convertible senior notes offering, the Company entered into Call Spread Transactions. The Call Spread Transactions included the purchase of call options and the sale of warrants. As a result of the Call Spread Transactions, the conversion price of $46.13 was effectively increased to $60.17. When the conversion premium and call spread transactions is dilutive to the Company's earnings per share (Newmont's share price exceeds $46.13 and $60.17, respectively) the underlying shares are included in the computation of diluted income per common share. The Company is not entitled to redeem the notes prior to their stated maturity dates. Using prevailing interest rates on similar instruments, the estimated fair value of the 2014 and 2017 senior notes was $697 and $627, respectively, at December 31, 2010 and $584 and $517, respectively, at December 31, 2009. The foregoing fair value estimates were prepared with the assistance of an independent third party and may or may not reflect the actual trading value of this debt.
The Company's Consolidated Balance Sheets report the following related to the convertible senior notes:
At December 31, 2010 | At December 31, 2009 | ||||||||||||||||
Convertible Senior Notes Due | Convertible Senior Notes Due | ||||||||||||||||
2012 | 2014 | 2017 | 2012 | 2014 | 2017 | ||||||||||||
Additional paid-in capital | $ | 46 | $ | 97 | $ | 123 | $ | 46 | $ | 97 | $ | 123 | |||||
Principal amount | $ | 518 | $ | 575 | $ | 575 | $ | 518 | $ | 575 | $ | 575 | |||||
Unamortized debt discount | (30) | (86) | (141) | (55) | (107) | (158) | |||||||||||
Net carrying amount | $ | 488 | $ | 489 | $ | 434 | $ | 463 | $ | 468 | $ | 417 |
For the years ended December 31, 2010 and 2009, the Company recorded $32 and $30 of interest expense for the contractual interest coupon and $63 and $56 of amortization of the debt discount, respectively, related to the convertible senior notes. The remaining unamortized debt discount is amortized over the remaining two, four and seven year periods of the 2012, 2014 and 2017 convertible senior notes, respectively. At December 31, 2010, the if-converted value of the 2012, 2014, and 2017 convertible senior notes exceeded the related principle amounts by $117, $130, and $130, respectively.
2019 and 2039 Senior Notes
In September 2009, the Company completed a two part public offering of $900 and $1,100 uncollateralized senior notes maturing on October 1, 2019 and October 1, 2039, respectively. Net proceeds from the 2019 and 2039 notes were $895 and $1,080, respectively. The 2019 notes pay interest semi-annually at a rate of 5.13% per annum and the 2039 notes pay semi-annual interest of 6.25% per annum. Using prevailing interest rates on similar instruments, the estimated fair value of the 2019 and 2039 senior notes was $984 and $1,189, respectively, at December 31, 2010 and $901 and $1,080, respectively, at December 31, 2009. The foregoing fair value estimates were prepared with the assistance of an independent third party and may or may not reflect the actual trading value of this debt.
2035 Senior Notes
In March 2005, Newmont issued uncollateralized senior notes with a principal amount of $600 due April 2035 bearing an annual interest rate of 5 7/8%. Interest on the notes is paid semi-annually in April and October. Using prevailing interest rates on similar instruments, the estimated fair value of these senior notes was $624 and $566 at December 31, 2010 and 2009, respectively. The foregoing fair value estimate was prepared with the assistance of an independent third party and may or may not reflect the actual trading value of this debt.
Project Financings
PTNNT Project Financing Facility
PTNNT had a project financing facility with a syndicate of banks. The scheduled repayments of this debt were semi-annual installments of $43 through November 2010 and $22 from May 2011 through November 2013. On February 23, 2010, PTNNT repaid the $220 remaining balance under the PTNNT project financing facility.
Yanacocha Credit Facility and Senior Notes
During 2006, Yanacocha entered into an uncollateralized $100 bank financing with a syndicate of Peruvian commercial banks and issued $100 of senior notes into the Peruvian capital markets. The credit facility and senior notes principal and interest were fully repaid in November 2010.
Ahafo
Newmont Ghana Gold Limited (“NGGL”) has an $85 project financing agreement with the International Finance Corporation (“IFC”) ($75) and a commercial lender ($10). NGGL borrowed $75 from the IFC in December 2008 and borrowed the remaining $10 in February 2009. Amounts borrowed are guaranteed by Newmont. Semi-annual payments through April 2017 are required. Borrowings bear interest of LIBOR plus 3.5%.
Debt Covenants
The Company's senior notes and sale-leaseback of the refractory ore treatment plant debt facilities contain various covenants and default provisions including payment defaults, limitation on liens, limitation on sales and leaseback agreements and merger restrictions.
The Ahafo project facility contains a financial ratio covenant requiring the Company to maintain a net debt (total debt net of cash and cash equivalents) to EBITDA (earnings before interest expense, income and mining taxes, depreciation and amortization) ratio of less than or equal to 4.0 and a net debt to total capitalization ratio of less than or equal to 62.5%.
In addition to the covenants noted above, the corporate revolving credit facility contains a financial ratio covenant requiring the Company to maintain a net debt (total debt net of cash and cash equivalents) to total capitalization ratio of less than or equal to 62.5%. Furthermore, the corporate revolving credit facility contains covenants limiting the sale of all or substantially all of the Company's assets, certain change of control provisions and a negative pledge on certain assets.
At December 31, 2010 and 2009, the Company and its related entities were in compliance with all debt covenants and provisions related to potential defaults.
|
NOTE 24 OTHER LIABILITIES | ||||||||
At December 31, | ||||||||
2010 | 2009 | |||||||
Other current liabilities: | ||||||||
Refinery metal payable | $ | 617 | $ | 671 | ||||
Accrued operating costs | 217 | 131 | ||||||
Taxes other than income and mining | 135 | 73 | ||||||
Royalties | 90 | 58 | ||||||
Accrued capital expenditures | 83 | 115 | ||||||
Interest | 66 | 72 | ||||||
Reclamation and remediation liabilities | 64 | 54 | ||||||
Deferred income tax | 54 | 17 | ||||||
Boddington contingent consideration | 32 | 16 | ||||||
Other | 60 | 110 | ||||||
$ | 1,418 | $ | 1,317 | |||||
Other long-term liabilities: | ||||||||
Boddington contingent consideration | $ | 51 | $ | 69 | ||||
Power supply agreements | 45 | - | ||||||
Income and mining taxes | 36 | 38 | ||||||
Other | 89 | 80 | ||||||
$ | 221 | $ | 187 |
|
NOTE 25 ACCUMULATED OTHER COMPREHENSIVE INCOME | ||||||||
At December 31, 2010 | ||||||||
2010 | 2009 | |||||||
Unrealized gain on marketable securities, net of $200 and $138 tax expense, respectively | $ | 902 | $ | 635 | ||||
Foreign currency translation adjustments | 155 | 57 | ||||||
Pension liability adjustments, net of $95 and $86 tax benefit, respectively | (176) | (161) | ||||||
Other post-retirement benefit adjustments, net of $6 and $4 tax expense, respectively | 11 | 9 | ||||||
Changes in fair value of cash flow hedge instruments, net of tax expense and noncontrolling interests of $97 and $38, respectively | 216 | 86 | ||||||
$ | 1,108 | $ | 626 |
|
NOTE 26 RELATED PARTY TRANSACTIONS | ||||||||||||
Newmont had transactions with AGR, as follows: | ||||||||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Gold and silver sales | $ | 3 | $ | 10 | $ | 10 | ||||||
Refining fees paid | $ | - | $ | 3 | $ | 3 | ||||||
See Note 11 for a discussion of Newmont's investment in AGR. |
|
NOTE 27 NET CHANGE IN OPERATING ASSETS AND LIABILITIES
Net cash provided from operations attributable to the net change in operating assets and liabilities is composed of the following:
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Decrease (increase) in operating assets: | |||||||||||
Trade and accounts receivable | $ | (153) | $ | 42 | $ | 81 | |||||
Inventories, stockpiles and ore on leach pads | (501) | (378) | (343) | ||||||||
EGR refinery assets | 116 | (508) | 38 | ||||||||
Other assets | (87) | (19) | (208) | ||||||||
Increase (decrease) in operating liabilities: | |||||||||||
Accounts payable and other accrued liabilities | 38 | 177 | (54) | ||||||||
EGR refinery liabilities | (116) | 508 | (38) | ||||||||
Reclamation liabilities | (51) | (49) | (103) | ||||||||
$ | (754) | $ | (227) | $ | (627) |
|
NOTE 28 SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||||
Years Ended December 31, | ||||||||||
2010 | 2009 | 2008 | ||||||||
Income and mining taxes, net of refunds | $ | 1,185 | $ | 431 | $ | 816 | ||||
Pension plan and other benefit contributions | $ | 163 | $ | 58 | $ | 76 | ||||
Interest, net of amounts capitalized | $ | 228 | $ | 117 | $ | 96 |
Noncash Investing Activities and Financing Activities
Minera Yanacocha entered into mining equipment leases that resulted in non-cash increases to Property, plant and mine development, net and Long-term debt of $12 in 2008. In 2008, Nevada entered into warehouse equipment leases that resulted in non-cash increases to Property, plant and mine development, net and Long-term debt of $2.
|
NOTE 29 OPERATING LEASE COMMITMENTS
The Company leases certain assets, such as equipment and facilities, under operating leases expiring at various dates through 2020. Future minimum annual lease payments are $26 in 2011, $23 in 2012, $18 in 2013, $8 in 2014, $8 in 2015 and $30 thereafter, totaling $113. Rent expense for 2010, 2009 and 2008 was $46, $48 and $36, respectively.
|
NOTE 30 CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
The following Consolidating Financial Statements are presented to satisfy disclosure requirements of Rule 3-10(e) of Regulation S-X resulting from the inclusion of Newmont USA Limited (“Newmont USA”), a wholly-owned subsidiary of Newmont, as a co-registrant with Newmont on a shelf registration statement on Form S-3 filed under the Securities Act of 1933 under which securities of Newmont (including debt securities which may be guaranteed by Newmont USA) may be issued from time to time (the “Shelf Registration Statement”). To the extent Newmont issues debt securities under the Shelf Registration Statement, it is expected that Newmont USA will provide a guarantee of that debt. In accordance with Rule 3-10(e) of Regulation S-X, Newmont USA, as the subsidiary guarantor, is 100% owned by Newmont, the guarantee will be full and unconditional, and it is not expected that any other subsidiary of Newmont will guarantee any security issued under the Shelf Registration Statement. There are no significant restrictions on the ability of Newmont USA to obtain funds from its subsidiaries by dividend or loan.
Years Ended December 31, 2010 | |||||||||||||||||
Newmont | |||||||||||||||||
Newmont | Mining | ||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||
Condensed Consolidating Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||
Sales | $ | - | $ | 6,568 | $ | 2,972 | $ | - | $ | 9,540 | |||||||
Costs and expenses | |||||||||||||||||
Costs applicable to sales (1) | - | 2,171 | 1,341 | (28) | 3,484 | ||||||||||||
Amortization | - | 601 | 345 | (1) | 945 | ||||||||||||
Reclamation and remediation | - | 48 | 17 | - | 65 | ||||||||||||
Exploration | - | 131 | 87 | - | 218 | ||||||||||||
Advanced projects, research and development | - | 110 | 107 | (1) | 216 | ||||||||||||
General and administrative | - | 144 | 4 | 30 | 178 | ||||||||||||
Write-down of property, plant and mine | |||||||||||||||||
development | - | 5 | 1 | - | 6 | ||||||||||||
Other expense, net | - | 183 | 78 | - | 261 | ||||||||||||
- | 3,393 | 1,980 | - | 5,373 | |||||||||||||
Other income (expense) | |||||||||||||||||
Other income, net | (4) | 29 | 84 | - | 109 | ||||||||||||
Interest income - intercompany | 161 | 7 | 5 | (173) | - | ||||||||||||
Interest expense - intercompany | (11) | - | (162) | 173 | - | ||||||||||||
Interest expense, net | (246) | (27) | (6) | - | (279) | ||||||||||||
(100) | 9 | (79) | - | (170) | |||||||||||||
Income before income and mining tax and other items | (100) | 3,184 | 913 | - | 3,997 | ||||||||||||
Income and mining tax expense | 479 | (1,114) | (221) | - | (856) | ||||||||||||
Equity income (loss) of affiliates | 1,926 | 2 | 281 | (2,206) | 3 | ||||||||||||
Income from continuing operations | 2,305 | 2,072 | 973 | (2,206) | 3,144 | ||||||||||||
Income (loss) from discontinued operations | (28) | 2 | (30) | 28 | (28) | ||||||||||||
Net income | 2,277 | 2,074 | 943 | (2,178) | 3,116 | ||||||||||||
Net income attributable to noncontrolling interests | - | (1,026) | 34 | 153 | (839) | ||||||||||||
Net income attributable to Newmont stockholders | $ | 2,277 | $ | 1,048 | $ | 977 | $ | (2,025) | $ | 2,277 | |||||||
(1) | Excludes Amortization and Reclamation and remediation. |
Years Ended December 31, 2009 | |||||||||||||||||
Newmont | |||||||||||||||||
Newmont | Mining | ||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||
Condensed Consolidating Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||
Sales | $ | - | $ | 5,911 | $ | 1,794 | $ | - | $ | 7,705 | |||||||
Costs and expenses | |||||||||||||||||
Costs applicable to sales (1) | - | 2,128 | 903 | (23) | 3,008 | ||||||||||||
Amortization | - | 565 | 242 | (1) | 806 | ||||||||||||
Reclamation and remediation | - | 41 | 18 | - | 59 | ||||||||||||
Exploration | - | 101 | 86 | - | 187 | ||||||||||||
Advanced projects, research and development | - | 66 | 71 | (2) | 135 | ||||||||||||
General and administrative | - | 129 | 4 | 26 | 159 | ||||||||||||
Write-down of property, plant and mine | |||||||||||||||||
development | - | 6 | 1 | - | 7 | ||||||||||||
Other expense, net | 9 | 160 | 189 | - | 358 | ||||||||||||
9 | 3,196 | 1,514 | - | 4,719 | |||||||||||||
Other income (expense) | |||||||||||||||||
Other income, net | (11) | 27 | 72 | - | 88 | ||||||||||||
Interest income - intercompany | 90 | 7 | 5 | (102) | - | ||||||||||||
Interest expense - intercompany | (9) | - | (93) | 102 | - | ||||||||||||
Interest expense, net | (65) | (47) | (8) | - | (120) | ||||||||||||
5 | (13) | (24) | - | (32) | |||||||||||||
Income before income and mining tax and other items | (4) | 2,702 | 256 | - | 2,954 | ||||||||||||
Income and mining tax expense | 1 | (781) | (49) | - | (829) | ||||||||||||
Equity income (loss) of affiliates | 1,316 | 5 | 185 | (1,522) | (16) | ||||||||||||
Income from continuing operations | 1,313 | 1,926 | 392 | (1,522) | 2,109 | ||||||||||||
Income (loss) from discontinued operations | (16) | (16) | - | 16 | (16) | ||||||||||||
Net income | 1,297 | 1,910 | 392 | (1,506) | 2,093 | ||||||||||||
Net income attributable to noncontrolling interests | - | (795) | (77) | 76 | (796) | ||||||||||||
Net income attributable to Newmont stockholders | $ | 1,297 | $ | 1,115 | $ | 315 | $ | (1,430) | $ | 1,297 | |||||||
(1) | Excludes Amortization and Reclamation and remediation. |
Years Ended December 31, 2008 | |||||||||||||||||
Newmont | |||||||||||||||||
Newmont | Mining | ||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||
Condensed Consolidating Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||
Sales | $ | - | $ | 4,638 | $ | 1,486 | $ | - | $ | 6,124 | |||||||
Costs and expenses | |||||||||||||||||
Costs applicable to sales (1) | - | 2,193 | 866 | (21) | 3,038 | ||||||||||||
Amortization | - | 549 | 190 | (1) | 738 | ||||||||||||
Reclamation and remediation | - | 85 | 57 | - | 142 | ||||||||||||
Exploration | - | 131 | 82 | - | 213 | ||||||||||||
Advanced projects, research and development | - | 63 | 107 | (4) | 166 | ||||||||||||
General and administrative | - | 113 | 6 | 25 | 144 | ||||||||||||
Write-down of property, plant and mine | |||||||||||||||||
development | - | 15 | 122 | - | 137 | ||||||||||||
Other expense, net | 1 | 176 | 62 | 1 | 240 | ||||||||||||
1 | 3,325 | 1,492 | - | 4,818 | |||||||||||||
Other income (expense) | |||||||||||||||||
Other income, net | (40) | 112 | 51 | - | 123 | ||||||||||||
Interest income - intercompany | 278 | 24 | - | (302) | - | ||||||||||||
Interest expense - intercompany | (8) | - | (294) | 302 | - | ||||||||||||
Interest expense, net | (74) | (56) | (5) | - | (135) | ||||||||||||
156 | 80 | (248) | - | (12) | |||||||||||||
Income before income and mining tax and other items | 155 | 1,393 | (254) | - | 1,294 | ||||||||||||
Income and mining tax expense | (55) | (132) | 45 | - | (142) | ||||||||||||
Equity income (loss) of affiliates | 718 | 4 | 102 | (829) | (5) | ||||||||||||
Income from continuing operations | 818 | 1,265 | (107) | (829) | 1,147 | ||||||||||||
Income (loss) from discontinued operations | 13 | (6) | 3 | 3 | 13 | ||||||||||||
Net income | 831 | 1,259 | (104) | (826) | 1,160 | ||||||||||||
Net income attributable to noncontrolling interests | - | (347) | 10 | 8 | (329) | ||||||||||||
Net income attributable to Newmont stockholders | $ | 831 | $ | 912 | $ | (94) | $ | (818) | $ | 831 | |||||||
(1) | Excludes Amortization and Reclamation and remediation. |
For the Year Ended December 31, 2010 | ||||||||||||||||||
Newmont | ||||||||||||||||||
Newmont | Mining | |||||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||||
Condensed Consolidating Statement of Cash Flows | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||
Operating activities: | ||||||||||||||||||
Net income | $ | 2,277 | $ | 2,074 | $ | 943 | $ | (2,178) | $ | 3,116 | ||||||||
Adjustments | (600) | 865 | (1,625) | 2,178 | 818 | |||||||||||||
Net change in operating assets and liabilities | (57) | (512) | (185) | - | (754) | |||||||||||||
Net cash provided from (used in) continuing operations | 1,620 | 2,427 | (867) | - | 3,180 | |||||||||||||
Net cash used in discontinued operations | - | (13) | - | - | (13) | |||||||||||||
Net cash provided from (used in) operations | 1,620 | 2,414 | (867) | - | 3,167 | |||||||||||||
Investing activities: | ||||||||||||||||||
Additions to property, plant and mine development | - | (721) | (681) | - | (1,402) | |||||||||||||
Acquisitions, net | - | - | (4) | - | (4) | |||||||||||||
Proceeds from sale of marketable securities | - | - | 3 | - | 3 | |||||||||||||
Purchases of marketable securities | - | (5) | (23) | - | (28) | |||||||||||||
Proceeds from sale of other assets | - | 16 | 40 | - | 56 | |||||||||||||
Other | - | - | (44) | - | (44) | |||||||||||||
Net cash used in investing activities | - | (710) | (709) | - | (1,419) | |||||||||||||
Financing activities: | ||||||||||||||||||
Net repayments | - | (420) | (10) | - | (430) | |||||||||||||
Net intercompany borrowings (repayments) | (1,442) | (152) | 1,730 | (136) | - | |||||||||||||
Proceeds from stock issuance | 60 | - | - | - | 60 | |||||||||||||
Sale of subsidiary shares to noncontrolling interests | - | 229 | - | - | 229 | |||||||||||||
Acquisition of subsidiary shares from noncontrolling | ||||||||||||||||||
interests | - | - | (110) | - | (110) | |||||||||||||
Dividends paid to noncontrolling interests | - | (598) | - | 136 | (462) | |||||||||||||
Dividends paid to common stockholders | (246) | - | - | - | (246) | |||||||||||||
Change in restricted cash and other | - | 46 | (2) | - | 44 | |||||||||||||
Net cash provided from (used in) financing activities | (1,628) | (895) | 1,608 | - | (915) | |||||||||||||
Effect of exchange rate changes on cash | - | 1 | 7 | - | 8 | |||||||||||||
Net change in cash and cash equivalents | (8) | 810 | 39 | - | 841 | |||||||||||||
Cash and cash equivalents at beginning of period | 8 | 3,067 | 140 | - | 3,215 | |||||||||||||
Cash and cash equivalents at end of period | $ | - | $ | 3,877 | $ | 179 | $ | - | $ | 4,056 |
For the Year Ended December 31, 2009 | ||||||||||||||||||
Newmont | ||||||||||||||||||
Newmont | Mining | |||||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||||
Condensed Consolidating Statement of Cash Flows | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||
Operating activities: | ||||||||||||||||||
Net income (loss) | $ | 1,297 | $ | 1,910 | $ | 392 | $ | (1,506) | $ | 2,093 | ||||||||
Adjustments | 75 | 683 | (1,216) | 1,506 | 1,048 | |||||||||||||
Net change in operating assets and liabilities | 135 | (400) | 38 | - | (227) | |||||||||||||
Net cash provided from (used in) continuing operations | 1,507 | 2,193 | (786) | - | 2,914 | |||||||||||||
Net cash provided from discontinued operations | - | 33 | - | - | 33 | |||||||||||||
Net cash provided from (used in) operations | 1,507 | 2,226 | (786) | - | 2,947 | |||||||||||||
Investing activities: | ||||||||||||||||||
Additions to property, plant and mine development | - | (470) | (1,299) | - | (1,769) | |||||||||||||
Acquisitions, net | (8) | (11) | (988) | - | (1,007) | |||||||||||||
Proceeds from sale of marketable securities | - | - | 17 | - | 17 | |||||||||||||
Purchases of marketable securities | - | - | (5) | - | (5) | |||||||||||||
Proceeds from sale of other assets | - | 15 | 3 | - | 18 | |||||||||||||
Other | - | - | (35) | - | (35) | |||||||||||||
Net cash used in investing activities | (8) | (466) | (2,307) | - | (2,781) | |||||||||||||
Financing activities: | ||||||||||||||||||
Net borrowings (repayments) | 1,722 | (154) | - | - | 1,568 | |||||||||||||
Net intercompany borrowings (repayments) | (4,298) | 953 | 3,345 | - | - | |||||||||||||
Proceeds from stock issuance | 1,278 | - | - | - | 1,278 | |||||||||||||
Sale of subsidiary shares to noncontrolling interests | - | 638 | - | - | 638 | |||||||||||||
Acquisition of subsidiary shares from noncontrolling | ||||||||||||||||||
interests | - | - | (287) | - | (287) | |||||||||||||
Dividends paid to noncontrolling interests | - | (391) | (3) | - | (394) | |||||||||||||
Dividends paid to common stockholders | (196) | - | - | - | (196) | |||||||||||||
Change in restricted cash and other | 2 | (48) | 11 | - | (35) | |||||||||||||
Net cash provided from (used in) financing activities of | ||||||||||||||||||
continuing operations | (1,492) | 998 | 3,066 | - | 2,572 | |||||||||||||
Net cash used in financing activities of discontinued | ||||||||||||||||||
operations | - | (2) | - | - | (2) | |||||||||||||
Net cash provided from (used in) financing activities | (1,492) | 996 | 3,066 | - | 2,570 | |||||||||||||
Effect of exchange rate changes on cash | 1 | 1 | 42 | - | 44 | |||||||||||||
Net change in cash and cash equivalents | 8 | 2,757 | 15 | - | 2,780 | |||||||||||||
Cash and cash equivalents at beginning of period | - | 310 | 125 | - | 435 | |||||||||||||
Cash and cash equivalents at end of period | $ | 8 | $ | 3,067 | $ | 140 | $ | - | $ | 3,215 |
For the Year Ended December 31, 2008 | ||||||||||||||||||
Newmont | ||||||||||||||||||
Newmont | Mining | |||||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||||
Condensed Consolidating Statement of Cash Flows | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||
Operating activities: | ||||||||||||||||||
Net income (loss) | $ | 831 | $ | 1,259 | $ | (104) | $ | (826) | $ | 1,160 | ||||||||
Adjustments | 49 | 419 | (430) | 826 | 864 | |||||||||||||
Net change in operating assets and liabilities | 17 | (575) | (69) | - | (627) | |||||||||||||
Net cash provided from (used in) continuing operations | 897 | 1,103 | (603) | - | 1,397 | |||||||||||||
Net cash provided from (used in) discontinued operations | - | (123) | 19 | - | (104) | |||||||||||||
Net cash provided from (used in) operations | 897 | 980 | (584) | - | 1,293 | |||||||||||||
Investing activities: | ||||||||||||||||||
Additions to property, plant and mine development | - | (707) | (1,163) | - | (1,870) | |||||||||||||
Acquisitions, net | - | (7) | (318) | - | (325) | |||||||||||||
Proceeds from sale of marketable securities | - | - | 50 | - | 50 | |||||||||||||
Purchases of marketable securities | - | - | (17) | - | (17) | |||||||||||||
Proceeds from sale of other assets | - | 17 | 35 | - | 52 | |||||||||||||
Other | - | - | (36) | - | (36) | |||||||||||||
Net cash used in investing activities of continuing operations | - | (697) | (1,449) | - | (2,146) | |||||||||||||
Net cash provided from (used in) investing activities of | ||||||||||||||||||
discontinued operations | - | (15) | 4 | - | (11) | |||||||||||||
Net cash used in investing activities | - | (712) | (1,445) | - | (2,157) | |||||||||||||
Financing activities: | ||||||||||||||||||
Net borrowings (repayments) | 757 | (116) | (46) | - | 595 | |||||||||||||
Net intercompany borrowings (repayments) | (1,518) | (287) | 1,805 | - | - | |||||||||||||
Proceeds from stock issuance | 29 | - | - | - | 29 | |||||||||||||
Dividends paid to noncontrolling interests | - | (385) | (4) | - | (389) | |||||||||||||
Dividends paid to common stockholders | (182) | - | - | - | (182) | |||||||||||||
Change in restricted cash and other | 17 | 48 | 9 | - | 74 | |||||||||||||
Net cash provided from (used in) financing activities of | ||||||||||||||||||
continuing operations | (897) | (740) | 1,764 | - | 127 | |||||||||||||
Net cash used in financing activities of discontinued | ||||||||||||||||||
operations | - | (4) | - | - | (4) | |||||||||||||
Net cash provided from (used in) financing activities | (897) | (744) | 1,764 | - | 123 | |||||||||||||
Effect of exchange rate changes on cash | - | (3) | (51) | - | (54) | |||||||||||||
Net change in cash and cash equivalents | - | (479) | (316) | - | (795) | |||||||||||||
Cash and cash equivalents at beginning of period | - | 789 | 441 | - | 1,230 | |||||||||||||
Cash and cash equivalents at end of period | $ | - | $ | 310 | $ | 125 | $ | - | $ | 435 |
At December 31, 2010 | |||||||||||||||||
Newmont | |||||||||||||||||
Newmont | Mining | ||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||
Condensed Consolidating Balance Sheet | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | - | $ | 3,877 | $ | 179 | $ | - | $ | 4,056 | |||||||
Trade receivables | - | 501 | 81 | - | 582 | ||||||||||||
Accounts receivable | 2,222 | 802 | 265 | (3,201) | 88 | ||||||||||||
Investments | - | 72 | 41 | - | 113 | ||||||||||||
Inventories | - | 388 | 270 | - | 658 | ||||||||||||
Stockpiles and ore on leach pads | - | 513 | 104 | - | 617 | ||||||||||||
Deferred income tax assets | - | 170 | 7 | - | 177 | ||||||||||||
Other current assets | - | 77 | 885 | - | 962 | ||||||||||||
Current assets | 2,222 | 6,400 | 1,832 | (3,201) | 7,253 | ||||||||||||
Property, plant and mine development, net | - | 5,364 | 7,562 | (19) | 12,907 | ||||||||||||
Investments | - | 25 | 1,543 | - | 1,568 | ||||||||||||
Investments in subsidiaries | 12,295 | 35 | 1,909 | (14,239) | - | ||||||||||||
Stockpiles and ore on leach pads | - | 1,347 | 410 | - | 1,757 | ||||||||||||
Deferred income tax assets | 638 | 690 | 109 | - | 1,437 | ||||||||||||
Other long-term assets | 2,675 | 496 | 584 | (3,014) | 741 | ||||||||||||
Total assets | $ | 17,830 | $ | 14,357 | $ | 13,949 | $ | (20,473) | $ | 25,663 | |||||||
Liabilities | |||||||||||||||||
Debt | $ | - | $ | 249 | $ | 10 | $ | - | $ | 259 | |||||||
Accounts payable | 355 | 1,269 | 1,996 | (3,193) | 427 | ||||||||||||
Employee-related benefits | - | 222 | 66 | - | 288 | ||||||||||||
Income and mining taxes | 19 | 261 | 75 | - | 355 | ||||||||||||
Other current liabilities | 56 | 373 | 2,959 | (1,970) | 1,418 | ||||||||||||
Current liabilities | 430 | 2,374 | 5,106 | (5,163) | 2,747 | ||||||||||||
Debt | 3,991 | 135 | 56 | - | 4,182 | ||||||||||||
Reclamation and remediation liabilities | - | 676 | 308 | - | 984 | ||||||||||||
Deferred income tax liabilities | - | 513 | 975 | - | 1,488 | ||||||||||||
Employee-related benefits | 5 | 244 | 76 | - | 325 | ||||||||||||
Other long-term liabilities | 375 | 56 | 2,824 | (3,034) | 221 | ||||||||||||
Total liabilities | 4,801 | 3,998 | 9,345 | (8,197) | 9,947 | ||||||||||||
Equity | |||||||||||||||||
Preferred stock | - | - | 61 | (61) | - | ||||||||||||
Common stock | 778 | - | - | - | 778 | ||||||||||||
Additional paid-in capital | 7,963 | 2,722 | 3,894 | (6,300) | 8,279 | ||||||||||||
Accumulated other comprehensive income | 1,108 | (75) | 1,180 | (1,105) | 1,108 | ||||||||||||
Retained earnings | 3,180 | 4,850 | (1,109) | (3,741) | 3,180 | ||||||||||||
Newmont stockholders’ equity | 13,029 | 7,497 | 4,026 | (11,207) | 13,345 | ||||||||||||
Noncontrolling interests | - | 2,862 | 578 | (1,069) | 2,371 | ||||||||||||
Total equity | 13,029 | 10,359 | 4,604 | (12,276) | 15,716 | ||||||||||||
Total liabilities and equity | $ | 17,830 | $ | 14,357 | $ | 13,949 | $ | (20,473) | $ | 25,663 | |||||||
At December 31, 2009 | |||||||||||||||||
Newmont | |||||||||||||||||
Newmont | Mining | ||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||
Condensed Consolidating Balance Sheet | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | 8 | $ | 3,067 | $ | 140 | $ | - | $ | 3,215 | |||||||
Trade receivables | - | 417 | 21 | - | 438 | ||||||||||||
Accounts receivable | 2,338 | 673 | 363 | (3,272) | 102 | ||||||||||||
Investments | - | 4 | 52 | - | 56 | ||||||||||||
Inventories | - | 307 | 186 | - | 493 | ||||||||||||
Stockpiles and ore on leach pads | - | 331 | 72 | - | 403 | ||||||||||||
Deferred income tax assets | - | 157 | 58 | - | 215 | ||||||||||||
Other current assets | - | 78 | 822 | - | 900 | ||||||||||||
Current assets | 2,346 | 5,034 | 1,714 | (3,272) | 5,822 | ||||||||||||
Property, plant and mine development, net | - | 5,195 | 7,193 | (18) | 12,370 | ||||||||||||
Investments | - | 26 | 1,160 | - | 1,186 | ||||||||||||
Investments in subsidiaries | 9,842 | 31 | 1,089 | (10,962) | - | ||||||||||||
Stockpiles and ore on leach pads | - | 1,323 | 179 | - | 1,502 | ||||||||||||
Deferred income tax assets | - | 844 | 93 | - | 937 | ||||||||||||
Other long-term assets | 2,551 | 357 | 419 | (2,845) | 482 | ||||||||||||
Total assets | $ | 14,739 | $ | 12,810 | $ | 11,847 | $ | (17,097) | $ | 22,299 | |||||||
Liabilities | |||||||||||||||||
Debt | $ | - | $ | 147 | $ | 10 | $ | - | $ | 157 | |||||||
Accounts payable | 46 | 1,201 | 2,413 | (3,264) | 396 | ||||||||||||
Employee-related benefits | - | 202 | 48 | - | 250 | ||||||||||||
Income and mining taxes | - | 192 | 8 | - | 200 | ||||||||||||
Other current liabilities | 58 | 281 | 2,949 | (1,971) | 1,317 | ||||||||||||
Current liabilities | 104 | 2,023 | 5,428 | (5,235) | 2,320 | ||||||||||||
Debt | 3,928 | 659 | 65 | - | 4,652 | ||||||||||||
Reclamation and remediation liabilities | - | 565 | 240 | - | 805 | ||||||||||||
Deferred income tax liabilities | 31 | 494 | 816 | - | 1,341 | ||||||||||||
Employee-related benefits | 4 | 324 | 53 | - | 381 | ||||||||||||
Other long-term liabilities | 338 | 75 | 2,637 | (2,863) | 187 | ||||||||||||
Total liabilities | 4,405 | 4,140 | 9,239 | (8,098) | 9,686 | ||||||||||||
Equity | |||||||||||||||||
Preferred stock | - | - | 61 | (61) | - | ||||||||||||
Common stock | 770 | - | - | - | 770 | ||||||||||||
Additional paid-in capital | 7,789 | 2,709 | 3,874 | (6,214) | 8,158 | ||||||||||||
Accumulated other comprehensive income | 626 | (125) | 738 | (613) | 626 | ||||||||||||
Retained earnings | 1,149 | 3,801 | (2,080) | (1,721) | 1,149 | ||||||||||||
Newmont stockholders’ equity | 10,334 | 6,385 | 2,593 | (8,609) | 10,703 | ||||||||||||
Noncontrolling interests | - | 2,285 | 15 | (390) | 1,910 | ||||||||||||
Total equity | 10,334 | 8,670 | 2,608 | (8,999) | 12,613 | ||||||||||||
Total liabilities and equity | $ | 14,739 | $ | 12,810 | $ | 11,847 | $ | (17,097) | $ | 22,299 | |||||||
|
NOTE 31 COMMITMENTS AND CONTINGENCIES
General
The Company follows ASC guidance in determining its accruals and disclosures with respect to loss contingencies. Accordingly, estimated losses from loss contingencies are accrued by a charge to income when information available prior to issuance of the financial statements indicates that it is probable (greater than a 75% probability) that a liability could be incurred and the amount of the loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the financial statements when it is at least reasonably possible that a material loss could be incurred.
Operating Segments
The Company's operating segments are identified in Note 3. Except as noted in this paragraph, all of the Company's commitments and contingencies specifically described in this Note 31 relate to the Corporate and Other reportable segment. The PT Newmont Minahasa Raya matters relate to the Asia Pacific reportable segment. The Yanacocha matters relate to the South America reportable segment. The PTNNT matters relate to the Asia Pacific reportable segment.
Environmental Matters
The Company's mining and exploration activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. The Company conducts its operations so as to protect the public health and environment and believes its operations are in compliance with applicable laws and regulations in all material respects. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures.
Estimated future reclamation costs are based principally on legal and regulatory requirements. At December 31, 2010 and 2009, $904 and $698, respectively, were accrued for reclamation costs relating to currently producing mineral properties in accordance with asset retirement obligation guidance. The current portions of $46 and $36 at December 31, 2010 and 2009, respectively, are included in Other current liabilities.
In addition, the Company is involved in several matters concerning environmental obligations associated with former mining activities. Generally, these matters concern developing and implementing remediation plans at the various sites involved. The Company believes that the related environmental obligations associated with these sites are similar in nature with respect to the development of remediation plans, their risk profile and the compliance required to meet general environmental standards. Based upon the Company's best estimate of its liability for these matters, $144 and $161 were accrued for such obligations at December 31, 2010 and 2009, respectively. These amounts are included in Other current liabilities and Reclamation and remediation liabilities. Depending upon the ultimate resolution of these matters, the Company believes that it is reasonably possible that the liability for these matters could be as much as 164% greater or 4% lower than the amount accrued at December 31, 2010. The amounts accrued for these matters are reviewed periodically based upon facts and circumstances available at the time. Changes in estimates are recorded in Reclamation and remediation in the period estimates are revised.
Details about certain of the more significant matters involved are discussed below.
Dawn Mining Company LLC (“Dawn”) - 51% Newmont Owned
Midnite Mine Site. Dawn previously leased an open pit uranium mine, currently inactive, on the Spokane Indian Reservation in the State of Washington. The mine site is subject to regulation by agencies of the U.S. Department of Interior (the Bureau of Indian Affairs and the Bureau of Land Management), as well as the United States Environmental Protection Agency (“EPA”).
In 1991, Dawn's mining lease at the mine was terminated. As a result, Dawn was required to file a formal mine closure and reclamation plan. The Department of Interior commenced an analysis of Dawn's proposed plan and alternate closure and reclamation plans for the mine. Work on this analysis has been suspended indefinitely. In mid-2000, the mine was included on the National Priorities List under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). In March 2003, the EPA notified Dawn and Newmont that it had thus far expended $12 on the Remedial Investigation/Feasibility Study (“RI/FS”) under CERCLA. In October 2005, the EPA issued the RI/FS on this property in which it indicated a preferred remedy that it estimated to cost approximately $150. Newmont and Dawn filed comments on the RI/FS with the EPA in January 2006. On October 3, 2006, the EPA issued a final Record of Decision in which it formally selected the preferred remedy identified in the RI/FS.
On January 28, 2005, the EPA filed a lawsuit against Dawn and Newmont under CERCLA in the U.S. District Court for the Eastern District of Washington. The EPA has asserted that Dawn and Newmont are liable for reclamation or remediation work and costs at the mine. Dawn does not have sufficient funds to pay for the reclamation plan it proposed or for any alternate plan, or for any additional remediation work or costs at the mine.
On July 14, 2008, after a bench trial, the Court held Newmont liable under CERCLA as an “operator” of the Midnite Mine. The Court previously ruled on summary judgment that both the U.S. Government and Dawn were liable under CERCLA. On October 17, 2008 the Court issued its written decision in the bench trial. The Court found Dawn and Newmont jointly and severally liable under CERCLA for past and future response costs, and ruled that each of Dawn and Newmont are responsible to pay one-third of such costs. The Court also found the U.S. Government liable on Dawn's and Newmont's contribution claim, and ruled that the U.S. Government is responsible to pay one-third of all past and future response costs. In November 2008, all parties appealed the Court's ruling. Also in November 2008, the EPA issued an Administrative Order pursuant to Section 106 of CERCLA ordering Dawn and Newmont to conduct water treatment, testing and other preliminary remedial actions. Newmont has initiated those preliminary remedial actions.
Newmont intends to continue to vigorously defend this matter and cannot reasonably predict the outcome of this lawsuit or the likelihood of any other action against Dawn or Newmont arising from this matter.
Dawn Mill Site. Dawn also owns a uranium mill site facility, located on private land near Ford, Washington, which is subject to state and federal regulation. In late 1999, Dawn sought and later received approval from the State of Washington for a revised closure plan that expedites the reclamation process at the site. The currently approved plan for the site is guaranteed by Newmont.
Newmont Canada Corporation (“Newmont Canada”) - 100% Newmont Owned
On November 11, 2008, St. Andrew Goldfields Ltd. (“St. Andrew”) filed an Application in the Superior Court of Justice in Ontario, Canada, seeking a declaration to clarify St. Andrew's royalty obligations regarding certain mineral rights and property formerly owned by Newmont Canada and now owned by St. Andrew.
Newmont Canada purchased the property, called the Holt-McDermott property (“Holt Property”), from Barrick Gold Corporation (“Barrick”) in October 2004. At that time, Newmont Canada entered into a royalty agreement with Barrick (the “Barrick Royalty”), allowing Barrick to retain a royalty on the Holt Property. In August 2006, Newmont Canada sold all of its interests in the Holt Property to Holloway Mining Company (“Holloway”) in exchange for common stock issued by Holloway. In September 2006, Newmont Canada entered into a purchase and sale agreement with St. Andrew (the “2006 Agreement”), under which St. Andrew acquired all the common stock of Holloway. In 2008, Barrick sold its Barrick Royalty to Royal Gold, Inc. (“Royal Gold”).
In the court proceedings, St. Andrew alleged that in the 2006 Agreement it only agreed to assume royalty obligations equal to 0.013% of net smelter returns from operations on the Holt Property. Such an interpretation of the 2006 Agreement would make Newmont responsible for any royalties exceeding that amount payable to Royal Gold pursuant to the Barrick Royalty, which is a royalty determined by multiplying 0.00013 by the quarterly average gold price. On July 23, 2009, the Superior Court issued a decision finding in favor of St. Andrews' interpretation. On August 21, 2009, Newmont Canada appealed the decision. If the Court of Appeals upholds the lower court ruling, Newmont will be liable for the sliding scale royalty, which would equal a 13% royalty at a quarterly average gold price of $1,000, minus a 0.013% of net smelter returns. There is no cap on the royalty at issue and it increases or decreases with the gold price, based upon the multiplication of 0.00013 by the quarterly average gold price. Newmont Canada intends to continue to vigorously defend this matter but cannot reasonably predict the outcome.
Newmont USA Limited - 100% Newmont Owned
Grey Eagle Mine Site. By letter dated September 3, 2002, the EPA notified Newmont that the EPA had expended $3 in response costs to address environmental conditions associated with a historic tailings pile located at the Grey Eagle Mine site near Happy Camp, California, and requested that Newmont pay those costs. The EPA has identified four potentially responsible parties, including Newmont. Newmont does not believe it has any liability for environmental conditions at the Grey Eagle Mine site, and intends to vigorously defend any formal claims by the EPA. Newmont cannot reasonably predict the likelihood or outcome of any future action against it arising from this matter.
Ross-Adams Mine Site. By letter dated June 5, 2007, the U.S. Forest Service notified Newmont that it had expended approximately $0.3 in response costs to address environmental conditions at the Ross-Adams mine in Prince of Wales, Alaska, and requested Newmont USA Limited pay those costs and perform an Engineering Evaluation/Cost Analysis (“EE/CA”) to assess what future response activities might need to be completed at the site. Newmont intends to vigorously defend any formal claims by the EPA. Newmont has agreed to perform the EE/CA. Newmont cannot reasonably predict the likelihood or outcome of any future action against it arising from this matter.
PT Newmont Minahasa Raya (“PTNMR”) - 80% Newmont Owned
On March 22, 2007, an Indonesian non-governmental organization named Wahana Lingkungan Hidup Indonesia (“WALHI”) filed a civil suit against PTNMR, the Newmont subsidiary that operated the Minahasa mine in Indonesia, and Indonesia's Ministry of Energy and Mineral Resources and Ministry for the Environment, alleging pollution from the disposal of mine tailings into Buyat Bay, and seeking a court order requiring PTNMR to fund a 25-year monitoring program in relation to Buyat Bay. In December 2007, the court ruled in PTNMR's favor and found that WALHI's allegations of pollution in Buyat Bay were without merit. In March 2008, WALHI appealed this decision to the Indonesian High Court. On January 27, 2010, the Indonesian High Court upheld the December 2007 ruling in favor of PTNMR. On May 17, 2010, WALHI filed an appeal of the January 27, 2010 Indonesian High Court ruling seeking review from the Indonesian Supreme Court. The appeal by WALHI is being reviewed by the Indonesian Supreme Court. Independent sampling and testing of Buyat Bay water and fish, as well as area residents, conducted by the World Health Organization and the Australian Commonwealth Scientific and Industrial Research Organization, confirm that PTNMR has not polluted the Buyat Bay environment, and, therefore, has not adversely affected the fish in Buyat Bay or the health of nearby residents. The Company remains steadfast that it has not caused pollution or health problems.
Other Legal Matters
Minera Yanacocha S.R.L. (“Yanacocha”) - 51.35% Newmont Owned
Choropampa. In June 2000, a transport contractor of Yanacocha spilled approximately 151 kilograms of elemental mercury near the town of Choropampa, Peru, which is located 53 miles (85 kilometers) southwest of the Yanacocha mine. Elemental mercury is not used in Yanacocha's operations but is a by-product of gold mining and was sold to a Lima firm for use in medical instruments and industrial applications. A comprehensive health and environmental remediation program was undertaken by Yanacocha in response to the incident. In August 2000, Yanacocha paid under protest a fine of 1,740,000 Peruvian soles (approximately $0.5) to the Peruvian government. Yanacocha has entered into settlement agreements with a number of individuals impacted by the incident. As compensation for the disruption and inconvenience caused by the incident, Yanacocha entered into agreements with and provided a variety of public works in the three communities impacted by this incident. Yanacocha cannot predict the likelihood of additional expenditures related to this matter.
Additional lawsuits relating to the Choropampa incident were filed against Yanacocha in the local courts of Cajamarca, Peru, in May 2002 by over 900 Peruvian citizens. A significant number of the plaintiffs in these lawsuits entered into settlement agreements with Yanacocha prior to filing such claims. In April 2008, the Peruvian Supreme Court upheld the validity of these settlement agreements, which the Company expects to result in the dismissal of all claims brought by previously settled plaintiffs. Yanacocha has also entered into settlement agreements with approximately 350 additional plaintiffs. The claims asserted by approximately 200 plaintiffs remain. Neither the Company nor Yanacocha can reasonably estimate the ultimate loss relating to such claims.
PT Newmont Nusa Tenggara (“PTNNT”) – 31.5% Newmont Direct Ownership
Under the Batu Hijau Contract of Work, beginning in 2006 and continuing through 2010, a portion of PTNNT's shares were required to be offered for sale, first, to the Indonesian government or, second, to Indonesian nationals, equal to the difference between the following percentages and the percentage of shares already owned by the Indonesian government or Indonesian nationals (if such number is positive): 23% by March 31, 2006; 30% by March 31, 2007; 37% by March 31, 2008; 44% by March 31, 2009; and 51% by March 31, 2010. As PT Pukuafu Indah (“PTPI”), an Indonesian national, has owned a 20% interest in PTNNT at all relevant times, in 2006, a 3% interest was required to be offered for sale and, in each of 2007 through 2010, an additional 7% interest was required to be offered (for an aggregate 31% interest). The price at which such interests were to be offered for sale to the Indonesian parties is the highest of the then-current replacement cost, the price at which shares would be accepted for listing on the Indonesian Stock Exchange, or the fair market value of such interest as a going concern, as agreed with the Indonesian government.
In accordance with the Contract of Work, an offer to sell a 3% interest was made to the Indonesian government in 2006 and an offer for an additional 7% interest was made in each of 2007, 2008 and 2009, and the offer for the final 7% interest was made in March 2010. While the central government declined to participate in the 2006 and 2007 offers, local governments in the area in which the Batu Hijau mine is located expressed interest in acquiring shares, as did various Indonesian nationals. After disagreement with the government over whether the government's first right to purchase had expired and receipt of Notices of Default from the government claiming breach and threatening termination of the Contract of Work, on March 3, 2008, the Indonesian government filed for international arbitration as provided under the Contract of Work, as did PTNNT. In the arbitration proceeding, PTNNT sought a declaration that the Indonesian government was not entitled to terminate the Contract of Work and additional declarations pertaining to the procedures for divesting the shares. For its part, the Indonesian government sought declarations that PTNNT was in default of its divestiture obligations, that the government may terminate the Contract of Work and recover damages for breach of the Contract of Work, and that PTNNT must cause shares subject to divestiture to be sold to certain local governments.
An international arbitration panel (the “Panel”) was appointed to resolve these claims and other claims that had arisen in relation to divestment and a hearing was held in Jakarta in December 2008. On March 31, 2009, the Panel issued its final award and decision on the matter. In its decision, the Panel determined that PTNNT's foreign shareholders had not complied with the divestiture procedure required by the Contract of Work in 2006 and 2007, but the Panel ruled that the Indonesian government was not entitled to immediately terminate the Contract of Work and rejected the Indonesian government's claim for damages. The Panel granted PTNNT 180 days from the date of notification of the final award to effect transfer of the 2006 3% interest and the 2007 7% interest in PTNNT to the local governments or their respective nominees. The Panel also applied a 180-day cure period to the 2008 7% interest, requiring that PTNNT effect the offer of the 2008 7% interest to the Indonesian government or its nominee within such 180-day period, and ensure the transfer of such shares if, after agreement on the transfer price, the Indonesian government invoked its right of first refusal under the Contract of Work. On July 14, 2009, the Company reached agreement with the Indonesian government on the price of the 2008 7% interest and the 2009 7% interest. PTNNT effected the reoffer of the 2008 7% interest and the 2009 7% interest to the Indonesian government at this newly agreed price. In November and December 2009, sale agreements were concluded pursuant to which the 2006, 2007 and 2008 shares were transferred to PT Multi Daerah Bersaing (“PTMDB”), the nominee of the local governments, and the 2009 shares were transferred to PTMDB in February 2010, resulting in PTMDB owning a 24% interest in PTNNT.
On December 17, 2010, the Ministry of Energy & Mineral Resources, acting on behalf of the Indonesian government, accepted the offer to acquire the final 7% interest in PTNNT. The government entity that will purchase the shares has not yet been designated, but the purchase and sale of this final 7% stake offered to complete the divestiture process is anticipated to close in the first half of 2011. Further disputes may arise in regard to the divestiture of the 2010 shares.
As part of the negotiation of the sale agreements with PTMDB, the parties executed an operating agreement (the “Operating Agreement”) under which each recognizes the rights of the Company and Sumitomo to apply their operating standards to the management of PTNNT's operations, including standards for safety, environmental stewardship and community responsibility. The Operating Agreement became effective upon the completion of the sale of the 2009 shares in February 2010 and will continue for so long as the Company and Sumitomo own more shares of PTNNT than PTMDB. If the Operating Agreement terminates, then the Company may lose control over the applicable operating standards for Batu Hijau and will be at risk for operations conducted in a manner that either detracts from value or results in safety, environmental or social standards below those adhered to by the Company and Sumitomo.
In the event of any future disputes under the Contract of Work or Operating Agreement, there can be no assurance that the Company would prevail in any such dispute and any termination of such contracts could result in substantial diminution in the value of the Company's interests in PTNNT.
Additionally, in February 2010, PTNNT was notified by the tax authorities of the Indonesian government, that PTNNT may be obligated to pay value added taxes on certain goods imported after the year 2000. PTNNT believes that pursuant to the terms of its Contract of Work, it is only required to pay value added taxes on these types of goods imported after February 28, 2010. The Company and PTNNT are working cooperatively with the applicable government authorities to resolve this matter.
Effective as of January 1, 2011, the local government in the region where the Batu Hijau mine is located purported to commence the enforcement of regulations that purport to require PTNNT to pay additional taxes based on revenue and the value of PTNNT's contracts. In addition, the regulations purport to require PTNNT to obtain certain export-related documents from the regional government for purposes of shipping copper concentrate. PTNNT is required to and has obtained all export related-documents in compliance with the laws and regulations of the central government. PTNNT believes that the new regional regulations are not enforceable as they expressly contradict higher level Indonesian laws that set out the permissible taxes that can be imposed by a regional government and all effective export requirements. PTNNT's position is supported by Indonesia's Ministry of Energy & Mineral Resources, Ministry of Trade, and the provincial government. To date, PTNNT has not been forced to comply with these new contradictory regional regulations. On February 4, 2011, PTNNT filed legal proceedings seeking to have the regulations declared null and void because they conflict with the laws of Indonesia. Further disputes with the local government could arise in relation to these regulations. PTNNT intends to vigorously defend its position in this dispute.
PT Pukuafu Indah Litigation
In October 2009, PTPI filed a lawsuit in the Central Jakarta District Court against PTNNT and the Indonesian government seeking to cancel the March 2009 arbitration award pertaining to the manner in which divestiture of shares in PTNNT should proceed (refer to the discussion of PTNNT above for the arbitration results). On October 11, 2010, the District Court ruled in favor of PTNNT and the Indonesian government finding, among other things, that PTPI lacks standing to contest the validity of the arbitration award. PTPI has filed a notice of appeal of the court's ruling.
Subsequent to its initial claim, PTPI filed numerous additional lawsuits, two of which have been withdrawn, against Newmont Indonesia Limited (“NIL”) and Nusa Tenggara Mining Corporation (“NTMC”), a subsidiary of Sumitomo, in the South Jakarta District Court. Fundamentally, the cases all relate to PTPI's contention that it owns, or has rights to own, the shares in PTNNT that NIL and NTMC have or will divest to fulfill the requirements of the PTNNT Contract of Work and the March 2009 arbitration award. PTPI also makes various other allegations, including alleged rights in or to the Company's or Sumitomo's non-divestiture shares in PTNNT, and PTPI asserts claims for significant damages allegedly arising from NIL's and NTMC's unlawful acts in transferring the divestiture shares to a third party. On November 30, 2010, the South Jakarta District Court rendered a decision in favor of PTPI in one of the cases which included an order that NIL/NTMC transfer 31% of PTNNT shares to PTPI and pay PTPI $26 in damages and certain monetary penalties. The order is not final and binding until the appeal process is completed. NIL and NTMC appealed the decision. In January 2010, PTPI also filed a lawsuit against PTNNT's President Director, Mr. Martiono Hadianto, alleging wrongful acts associated with the arbitration, including failure to properly share certain information. The South Jakarta District Court issued a decision partially in favor of PTPI against the PTNNT President Director, requiring the production of arbitration documents. The PTNNT President Director has appealed the decision which is non binding until the appeal process is completed. Despite the rulings, Newmont, Sumitomo and PTNNT's management believe that all of PTPI's claims in these cases are without merit and constitute a material breach of a written release agreement executed by PTPI in 2009, in which it and its shareholders committed to cease prosecution of all then-pending lawsuits and not to initiate new proceedings, in conjunction with Newmont's provision of financing to PTPI in late 2009.
In August 2010, NIL and NVL USA Limited (“NVL”) commenced an arbitration against PTPI in the Singapore International Arbitration Centre, as provided in relevant agreements, seeking declarations that PTPI has violated the release agreement by failing to dismiss its Indonesian lawsuits, that PTPI is in breach of the November 2009 loan facility and related agreements, and that NIL and NVL are entitled to damages arising from PTPI's and its shareholders' conduct.
On October 1, 2010, NIL and NVL requested, based upon the release agreement, that the arbitral tribunal issue an interim order requiring PTPI and its shareholders to discontinue the various Indonesian court proceedings and refrain from bringing additional lawsuits. On October 15, 2010, the tribunal issued an order granting NIL and NVL's request. The order of the tribunal restrains PTPI and its agents from “proceeding with or continuing with or assisting or participating in the prosecution of the Indonesian [s]uits” and from commencing additional proceedings relating to the same subject matter as the Indonesian lawsuits. NIL and NVL are in the process of enforcing the interim award in Indonesian courts but it is not known the extent to which the Indonesian courts will enforce the order or whether PTPI and its shareholders will, in any event, abide by the order.
The Company intends to continue vigorously defending the PTPI lawsuits and pursuing its claims against PTPI in arbitration.
Other Commitments and Contingencies
Tax contingencies are provided for in accordance with ASC income tax guidance (see Note 10).
In a 1993 asset exchange, a wholly-owned subsidiary transferred a coal lease under which the subsidiary had collected advance royalty payments totaling $484. From 1994 to 2018, remaining advance payments under the lease to the transferee total $390. In the event of title failure as stated in the lease, this subsidiary has a primary obligation to refund previously collected payments and has a secondary obligation to refund any of the $390 collected by the transferee, if the transferee fails to meet its refund obligation. The subsidiary has title insurance on the leased coal deposits of $240 covering the secondary obligation. The Company and the subsidiary regard the circumstances entitling the lessee to a refund as remote.
The Company has minimum royalty obligations on one of its producing mines in Nevada for the life of the mine. Amounts paid as a minimum royalty (where production royalties are less than the minimum obligation) in any year are recoverable in future years when the minimum royalty obligation is exceeded. Although the minimum royalty requirement may not be met in a particular year, the Company expects that over the mine life, gold production will be sufficient to meet the minimum royalty requirements. Minimum royalty payments payable are $28 in 2011 through 2015 and $251 thereafter.
As part of its ongoing business and operations, the Company and its affiliates are required to provide surety bonds, bank letters of credit and bank guarantees as financial support for various purposes, including environmental reclamation, exploration permitting, workers compensation programs and other general corporate purposes. At December 31, 2010 and December 31, 2009, there were $1,191 and $1,073, respectively, of outstanding letters of credit, surety bonds and bank guarantees. The surety bonds, letters of credit and bank guarantees reflect fair value as a condition of their underlying purpose and are subject to fees competitively determined in the market place. The obligations associated with these instruments are generally related to performance requirements that the Company addresses through its ongoing operations. As the specific requirements are met, the beneficiary of the associated instrument cancels and/or returns the instrument to the issuing entity. Certain of these instruments are associated with operating sites with long-lived assets and will remain outstanding until closure. Generally, bonding requirements associated with environmental regulation are becoming more restrictive. However, the Company, believes it is in compliance with all applicable bonding obligations and will be able to satisfy future bonding requirements, through existing or alternative means, as they arise.
Newmont is from time to time involved in various legal proceedings related to its business. Except in the above-described proceedings, management does not believe that adverse decisions in any pending or threatened proceeding or that amounts that may be required to be paid by reason thereof will have a material adverse effect on the Company's financial condition or results of operations.
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NOTE 32 UNAUDITED SUPPLEMENTARY DATA | ||||||||||||||
Quarterly Data | ||||||||||||||
The following is a summary of selected quarterly financial information (unaudited): | ||||||||||||||
2010 | ||||||||||||||
Three Months Ended | ||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||
Sales | $ | 2,242 | $ | 2,153 | $ | 2,597 | $ | 2,548 | ||||||
(1) | $ | 1,135 | $ | 1,062 | $ | 1,447 | $ | 1,402 | ||||||
(2) | $ | 546 | $ | 382 | $ | 537 | $ | 840 | ||||||
Income (loss) from discontinued operations(2) | - | - | - | (28) | ||||||||||
(2) | $ | 546 | $ | 382 | $ | 537 | $ | 812 | ||||||
Income per common share | ||||||||||||||
Basic: | ||||||||||||||
Continuing operations | $ | 1.11 | $ | 0.78 | $ | 1.09 | $ | 1.71 | ||||||
Discontinued operations | - | - | - | (0.06) | ||||||||||
$ | 1.11 | $ | 0.78 | $ | 1.09 | $ | 1.65 | |||||||
Diluted: | ||||||||||||||
Continuing operations | $ | 1.11 | $ | 0.77 | $ | 1.07 | $ | 1.67 | ||||||
Discontinued operations | - | - | - | (0.06) | ||||||||||
$ | 1.11 | $ | 0.77 | $ | 1.07 | $ | 1.61 | |||||||
Weighted average common shares (millions) | ||||||||||||||
Basic | 491 | 492 | 493 | 493 | ||||||||||
Diluted | 493 | 499 | 502 | 504 | ||||||||||
Cash dividends declared per common share | $ | 0.10 | $ | 0.10 | $ | 0.15 | $ | 0.15 | ||||||
Closing price of common stock | $ | 50.93 | $ | 61.74 | $ | 62.81 | $ | 61.43 | ||||||
2009 | ||||||||||||||
Three Months Ended | ||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||
Sales | $ | 1,536 | $ | 1,602 | $ | 2,049 | $ | 2,518 | ||||||
(1) | $ | 606 | $ | 726 | $ | 1,083 | $ | 1,417 | ||||||
(2) | $ | 189 | $ | 171 | $ | 388 | $ | 560 | ||||||
Income (loss) from discontinued operations(2) | - | (9) | - | (2) | ||||||||||
(2) | $ | 189 | $ | 162 | $ | 388 | $ | 558 | ||||||
Income per common share | ||||||||||||||
Basic: | ||||||||||||||
Continuing operations | $ | 0.40 | $ | 0.35 | $ | 0.79 | $ | 1.14 | ||||||
Discontinued operations | - | (0.02) | - | - | ||||||||||
$ | 0.40 | $ | 0.33 | $ | 0.79 | $ | 1.14 | |||||||
Diluted: | ||||||||||||||
Continuing operations | $ | 0.40 | $ | 0.35 | $ | 0.79 | $ | 1.13 | ||||||
Discontinued operations | - | (0.02) | - | - | ||||||||||
$ | 0.40 | $ | 0.33 | $ | 0.79 | $ | 1.13 | |||||||
Weighted average common shares (millions) | ||||||||||||||
Basic | 472 | 490 | 490 | 491 | ||||||||||
Diluted | 473 | 491 | 491 | 493 | ||||||||||
Cash dividends declared per common share | $ | 0.10 | $ | 0.10 | $ | 0.10 | $ | 0.10 | ||||||
Closing price of common stock | $ | 44.76 | $ | 40.87 | $ | 44.02 | $ | 47.31 |
(1) Sales less Costs applicable to sales, Amortization and Reclamation and remediation.
(2) Attributable to Newmont stockholders.
Significant after-tax items were as follows:
Fourth quarter 2010: (i) a $264 ($0.54 per share, basic) income tax benefit from internal restructuring;
Third quarter 2010: none;
Second quarter 2010: (i) a $7 ($0.01 per share, basic) net gain on asset sales;
First quarter 2010: (i) a $127 ($0.26 per share, basic) income tax benefit from internal restructuring; (ii) a $25 ($0.05 per share, basic) net gain on asset sales and (iii) a $13 ($0.03 per share, basic) PTNNT community contribution;
Fourth quarter 2009: (i) a $15 ($0.03 per share, basic) loss related to Boddington contingent consideration and (ii) a $14 ($0.03 per share, basic) gain on asset sales;
Third quarter 2009: none;
Second quarter 2009: (i) a $42 ($0.08 per share, basic) loss related to Boddington acquisition costs;
First quarter 2009: (i) a $9 ($0.02 per share, basic) loss related to workforce reduction costs; (ii) a $5 ($0.01 per share, basic) loss related to Boddington acquisition costs and (iii) a $5 ($0.01 per share, basic) loss on the impairment of marketable equity securities and other assets.
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NOTE 33 SUBSEQUENT EVENTS
On February 3, 2011, Newmont and Fronteer Gold Inc. (“Fronteer”) announced that they had entered into an agreement under which Newmont will acquire all of the outstanding common shares of Fronteer by way of a Plan of Arrangement (“Arrangement”). Fronteer owns, among other assets, the exploration stage Long Canyon project, which is located approximately one hundred miles from the Company's existing infrastructure in Nevada and provides the potential for significant development and operating synergies. Under the Arrangement, shareholders of Fronteer will receive C$14.00 in cash and one common share in Pilot Gold, which will retain certain exploration assets of Fronteer, for each common share of Fronteer. The transaction is expected to close in the second quarter of 2011 for approximately C$2,300. Provided for in the Arrangement is a break fee of C$85 if the transaction is not completed in certain specified circumstances.
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Cash and Cash Equivalents
Cash and cash equivalents consist of all cash balances and highly liquid investments with an original maturity of three months or less. Because of the short maturity of these investments, the carrying amounts approximate their fair value. Cash and cash equivalents are invested in United States Treasury securities and money market securities. Restricted cash is excluded from cash and cash equivalents and is included in other current and long-term assets.
Investments
Management determines the appropriate classification of its investments in equity securities at the time of purchase and reevaluates such determinations at each reporting date. Investments in incorporated entities in which the Company's ownership is greater than 20% and less than 50%, or which the Company does not control through majority ownership or means other than voting rights, are accounted for by the equity method and are included in long-term assets. The Company accounts for its equity security investments as available for sale securities in accordance with ASC guidance on accounting for certain investments in debt and equity securities. The Company periodically evaluates whether declines in fair values of its investments below the Company's carrying value are other-than-temporary in accordance with guidance for the meaning of other-than-temporary impairment and its application to certain investments. The Company's policy is to generally treat a decline in the investment's quoted market value that has lasted continuously for more than six months as an other-than-temporary decline in value. The Company also monitors its investments for events or changes in circumstances that have occurred that may have a significant adverse effect on the fair value of the investment and evaluates qualitative and quantitative factors regarding the severity and duration of the unrealized loss and the Company's ability to hold the investment until a forecasted recovery occurs to determine if the decline in value of an investment is other-than-temporary. Declines in fair value below the Company's carrying value deemed to be other-than-temporary are charged to earnings. Additional information concerning the Company's equity method and security investments is included in Note 18.
Stockpiles, Ore on Leach Pads and Inventories
As described below, costs that are incurred in or benefit the productive process are accumulated as stockpiles, ore on leach pads and inventories. Stockpiles, ore on leach pads and inventories are carried at the lower of average cost or net realizable value. Net realizable value represents the estimated future sales price of the product based on current and long-term metals prices, less the estimated costs to complete production and bring the product to sale. Write-downs of stockpiles, ore on leach pads and inventories, resulting from net realizable value impairments, are reported as a component of Costs applicable to sales. The current portion of stockpiles, ore on leach pads and inventories is determined based on the expected amounts to be processed within the next 12 months. Stockpiles, ore on leach pads and inventories not expected to be processed within the next 12 months are classified as long-term. The major classifications are as follows:
Stockpiles
Stockpiles represent ore that has been extracted from the mine and is available for further processing. Stockpiles are measured by estimating the number of tons added and removed from the stockpile, the number of contained ounces or pounds (based on assay data) and the estimated metallurgical recovery rates (based on the expected processing method). Stockpile ore tonnages are verified by periodic surveys. Costs are allocated to stockpiles based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the ore, including applicable overhead and amortization relating to mining operations, and removed at each stockpile's average cost per recoverable unit.
Ore on Leach Pads
The recovery of gold from certain gold oxide ores is achieved through the heap leaching process. Under this method, oxide ore is placed on leach pads where it is treated with a chemical solution, which dissolves the gold contained in the ore. The resulting gold-bearing solution is further processed in a plant where the gold is recovered. Costs are added to ore on leach pads based on current mining costs, including applicable amortization relating to mining operations. Costs are removed from ore on leach pads as ounces are recovered based on the average cost per estimated recoverable ounce of gold on the leach pad.
The estimates of recoverable gold on the leach pads are calculated from the quantities of ore placed on the leach pads (measured tons added to the leach pads), the grade of ore placed on the leach pads (based on assay data) and a recovery percentage (based on ore type). In general, leach pads recover between 50% and 95% of the recoverable ounces in the first year of leaching, declining each year thereafter until the leaching process is complete.
Although the quantities of recoverable gold placed on the leach pads are reconciled by comparing the grades of ore placed on pads to the quantities of gold actually recovered (metallurgical balancing), the nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, the metallurgical balancing process is constantly monitored and estimates are refined based on actual results over time. Historically, the Company's operating results have not been materially impacted by variations between the estimated and actual recoverable quantities of gold on its leach pads. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis.
In-process Inventory
In-process inventories represent materials that are currently in the process of being converted to a saleable product. Conversion processes vary depending on the nature of the ore and the specific processing facility, but include mill in-circuit, leach in-circuit, flotation and column cells, and carbon in-pulp inventories. In-process material is measured based on assays of the material fed into the process and the projected recoveries of the respective plants. In-process inventories are valued at the average cost of the material fed into the process attributable to the source material coming from the mines, stockpiles and/or leach pads plus the in-process conversion costs, including applicable amortization relating to the process facilities incurred to that point in the process.
Precious Metals Inventory
Precious metals inventories include gold doré and/or gold bullion. Precious metals that result from the Company's mining and processing activities are valued at the average cost of the respective in-process inventories incurred prior to the refining process, plus applicable refining costs.
Concentrate Inventory
Concentrate inventories represent copper and gold concentrate available for shipment. The Company values concentrate inventory at the average cost, including an allocable portion of support costs and amortization. Costs are added and removed to the concentrate inventory based on tons of concentrate and are valued at the lower of average cost or net realizable value.
Materials and Supplies
Materials and supplies are valued at the lower of average cost or net realizable value. Cost includes applicable taxes and freight.
Property, Plant and Mine Development
Facilities and equipment
Expenditures for new facilities or equipment and expenditures that extend the useful lives of existing facilities or equipment are capitalized and recorded at cost. The facilities and equipment are amortized using the straight-line method at rates sufficient to amortize such costs over the estimated productive lives, which do not exceed the related estimated mine lives, of such facilities based on proven and probable reserves.
Mine Development
Mine development costs include engineering and metallurgical studies, drilling and other related costs to delineate an ore body, the removal of overburden to initially expose an ore body at open pit surface mines and the building of access ways, shafts, lateral access, drifts, ramps and other infrastructure at underground mines. Costs incurred before mineralization are classified as proven and probable reserves are expensed and classified as Exploration or Advanced projects, research and development expense. Capitalization of mine development project costs, that meet the definition of an asset, begins once mineralization is classified as proven and probable reserves.
Drilling and related costs are capitalized for an ore body where proven and probable reserves exist and the activities are directed at obtaining additional information on the ore body or converting non-reserve mineralization to proven and probable reserves and the benefit is expected to be realized over a period beyond one year. All other drilling and related costs are expensed as incurred. Drilling costs incurred during the production phase for operational ore control are allocated to inventory costs and then included as a component of Costs applicable to sales.
The cost of removing overburden and waste materials to access the ore body at an open pit mine prior to the production phase are referred to as “pre-stripping costs.” Pre-stripping costs are capitalized during the development of an open pit mine. Where multiple open pits exist at a mining complex utilizing common processing facilities, pre-stripping costs are capitalized at each pit. The removal, production, and sale of de minimis saleable materials may occur during development and are recorded as Other income, net of incremental mining and processing costs.
The production phase of an open pit mine commences when saleable minerals, beyond a de minimis amount, are produced. Stripping costs incurred during the production phase of a mine are variable production costs that are included as a component of inventory to be recognized in Costs applicable to sales in the same period as the revenue from the sale of inventory. The Company's definition of a mine and the mine's production phase may differ from that of other companies in the mining industry resulting in incomparable allocations of stripping costs to deferred mine development and production costs. Other mining companies may expense pre-stripping costs associated with subsequent pits within a mining complex.
Mine development costs are amortized using the units-of-production (“UOP”) method based on estimated recoverable ounces or pounds in proven and probable reserves. To the extent that these costs benefit an entire ore body, they are amortized over the estimated life of the ore body. Costs incurred to access specific ore blocks or areas that only provide benefit over the life of that area are amortized over the estimated life of that specific ore block or area.
Mineral Interests
Mineral interests include acquired interests in production, development and exploration stage properties. The mineral interests are capitalized at their fair value at the acquisition date, either as an individual asset purchase or as part of a business combination.
The value of such assets is primarily driven by the nature and amount of mineralized material believed to be contained in such properties. Production stage mineral interests represent interests in operating properties that contain proven and probable reserves. Development stage mineral interests represent interests in properties under development that contain proven and probable reserves. Exploration stage mineral interests represent interests in properties that are believed to potentially contain mineralized material consisting of (i) mineralized material such as inferred material within pits; measured, indicated and inferred material with insufficient drill spacing to qualify as proven and probable reserves; and inferred material in close proximity to proven and probable reserves; (ii) around-mine exploration potential such as inferred material not immediately adjacent to existing reserves and mineralization, but located within the immediate mine area; (iii) other mine-related exploration potential that is not part of measured, indicated or inferred material and is comprised mainly of material outside of the immediate mine area; (iv) greenfields exploration potential that is not associated with any other production, development or exploration stage property, as described above; or (v) any acquired right to explore or extract a potential mineral deposit. The Company's mineral rights generally are enforceable regardless of whether proven and probable reserves have been established. In certain limited situations, the nature of a mineral right changes from an exploration right to a mining right upon the establishment of proven and probable reserves. The Company has the ability and intent to renew mineral interests where the existing term is not sufficient to recover all identified and valued proven and probable reserves and/or undeveloped mineralized material.
Asset Impairment
The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. An impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the assets, including goodwill, if any. An impairment loss is measured and recorded based on discounted estimated future cash flows. Future cash flows are estimated based on quantities of recoverable minerals, expected gold and other commodity prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans. Existing proven and probable reserves and value beyond proven and probable reserves, including mineralization that is not part of the measured, indicated or inferred resource base, are included when determining the fair value of mine site reporting units at acquisition and, subsequently, in determining whether the assets are impaired. The term “recoverable minerals” refers to the estimated amount of gold or other commodities that will be obtained after taking into account losses during ore processing and treatment. Estimates of recoverable minerals from such exploration stage mineral interests are risk adjusted based on management's relative confidence in such materials. In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. The Company's estimates of future cash flows are based on numerous assumptions and it is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, gold and other commodity prices, production levels and costs and capital are each subject to significant risks and uncertainties.
Revenue Recognition
Revenue is recognized, net of treatment and refining charges, from a sale when persuasive evidence of an arrangement exists, the price is determinable, the product has been delivered, the title has been transferred to the customer and collection of the sales price is reasonably assured. Revenues from by-product sales are credited to Costs applicable to sales as a by-product credit.
Concentrate sales are initially recorded based on 100% of the provisional sales prices. Until final settlement occurs, adjustments to the provisional sales prices are made to take into account the mark-to-market changes based on the forward prices for the estimated month of settlement. For changes in metal quantities upon receipt of new information and assay, the provisional sales quantities are adjusted as well. The principal risks associated with recognition of sales on a provisional basis include metal price fluctuations between the date initially recorded and the date of final settlement. If a significant decline in metal prices occurs between the provisional pricing date and the final settlement date, it is reasonably possible that the Company could be required to return a portion of the sales proceeds received based on the provisional invoice.
The Company's sales based on a provisional price contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of the concentrates at the forward exchange price at the time of sale. The embedded derivative, which does not qualify for hedge accounting, is marked to market through earnings each period prior to final settlement.
Income and Mining Taxes
The Company accounts for income taxes using the liability method, recognizing certain temporary differences between the financial reporting basis of the Company's liabilities and assets and the related income tax basis for such liabilities and assets. This method generates either a net deferred income tax liability or asset for the Company, as measured by the statutory tax rates in effect. The Company derives its deferred income tax charge or benefit by recording the change in either the net deferred income tax liability or asset balance for the year. Mining taxes represent state and provincial taxes levied on mining operations and are classified as income taxes; as such taxes are based on a percentage of mining profits. With respect to the earnings that the Company derives from the operations of its consolidated subsidiaries, in those situations where the earnings are indefinitely reinvested, no deferred taxes have been provided on the unremitted earnings (including the excess of the carrying value of the net equity of such entities for financial reporting purposes over the tax basis of such equity) of these consolidated companies.
The Company's deferred income tax assets include certain future tax benefits. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized.
The Company's operations involve dealing with uncertainties and judgments in the application of complex tax regulations in multiple jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions and resolution of disputes arising from federal, state, and international tax audits. The Company recognizes potential liabilities and records tax liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on its estimate of whether, and the extent to which, additional taxes will be due. The Company adjusts these reserves in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company's current estimate of the tax liabilities. If the Company's estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If the estimate of tax liabilities proves to be greater than the ultimate assessment, a tax benefit would result. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in Income and mining tax expense.
Foreign Currency
The functional currency for the majority of the Company's operations, including the Australian operations, is the U.S. dollar. All monetary assets and liabilities where the functional currency is the U.S. dollar are translated at current exchange rates and the resulting adjustments are included in Other income, net. All monetary assets and liabilities recorded in functional currencies other than U.S. dollars are translated at current exchange rates and the resulting adjustments are charged or credited directly to Accumulated other comprehensive income in Equity. Revenues and expenses in foreign currencies are translated at the weighted-average exchange rates for the period.
Derivative Instruments
Newmont has fixed forward contracts designated as cash flow hedges in place to hedge against changes in foreign exchanges rates and diesel prices and fixed to floating interest rate swap contracts designated as fair value hedges to provide balance to the Company's mix of fixed and floating rate debt. The fair value of derivative contracts qualifying as cash flow hedges are reflected as assets or liabilities in the balance sheet. To the extent these hedges are effective in offsetting forecasted cash flows from production costs (the “effective portion”), changes in fair value are deferred in Accumulated other comprehensive income. Amounts deferred in Accumulated other comprehensive income are reclassified to Costs applicable to sales, as applicable, when the hedged transaction has occurred. The ineffective portion of the change in the fair value of the derivative is recorded in Other income, net in each period. Cash transactions related to the Company's derivative contracts accounted for as hedges are classified in the same category as the item being hedged in the statement of cash flows.
When derivative contracts qualifying as cash flow hedges are settled, accelerated or restructured before the maturity date of the contracts, the related amount in Accumulated other comprehensive income at the settlement date is deferred and reclassified to earnings, as applicable, when the originally designated hedged transaction impacts earnings.
The fair value of derivative contracts qualifying as fair value hedges are reflected as assets or liabilities in the balance sheet. Changes in fair value are recorded in income in each period, consistent with recording changes to the mark-to-market value of the underlying hedged asset or liability in income. Changes in the mark-to-market value of the effective portion of interest rate swaps utilized by the Company to swap a portion of its fixed rate interest rate risk to floating rate risk are recognized as a component of Interest expense, net.
Newmont assesses the effectiveness of the derivative contracts periodically using either regression analysis or the dollar offset approach, both retrospectively and prospectively, to determine whether the hedging instruments have been highly effective in offsetting changes in the fair value of the hedged items. The Company will also assess periodically whether the hedging instruments are expected to be highly effective in the future. If a hedging instrument is not expected to be highly effective, the Company will stop hedge accounting prospectively. In those instances, the gains or losses remain in Accumulated other comprehensive income until the hedged item affects earnings.
The ASC guidance for derivatives and hedging was updated for enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and the related hedged items are accounted for, and how derivative instruments and the related hedged items affect an entity's financial position, financial performance and cash flows. The Company adopted the updated guidance on January 1, 2009.
Net Income per Common Share
Basic and diluted income per share are presented for Net income attributable to Newmont stockholders and for Income from continuing operations attributable to Newmont stockholders. Basic income per share is computed by dividing income available to common shareholders by the weighted-average number of outstanding common shares for the period, including the exchangeable shares (see Notes 14 and 23). Diluted income per share reflects the potential dilution that could occur if securities or other contracts that may require the issuance of common shares in the future were converted. Diluted income per share is computed by increasing the weighted-average number of outstanding common shares to include the additional common shares that would be outstanding after conversion and adjusting net income for changes that would result from the conversion. Only those securities or other contracts that result in a reduction in earnings per share are included in the calculation.
Recently Adopted Accounting Pronouncements
Variable Interest Entities
In June 2009, the ASC guidance for consolidation accounting was updated to require an entity to perform a qualitative analysis to determine whether the enterprise's variable interest gives it a controlling financial interest in a VIE. This qualitative analysis identifies the primary beneficiary of a VIE as the entity that has both of the following characteristics: (i) the power to direct the activities of a VIE that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses or receive benefits from the entity that could potentially be significant to the VIE. The updated guidance also requires ongoing reassessments of the primary beneficiary of a VIE. Adoption of the updated guidance, effective for the Company's fiscal year beginning January 1, 2010, had no impact on the Company's consolidated financial position, results of operations or cash flows.
Fair Value Accounting
In January 2010, ASC guidance for fair value measurements and disclosure was updated to require additional disclosures related to transfers in and out of level 1 and 2 fair value measurements. The guidance was amended to clarify the level of disaggregation required for assets and liabilities and the disclosures required for inputs and valuation techniques used to measure the fair value of assets and liabilities that fall in either level 2 or level 3. The updated guidance was effective for the Company's fiscal year beginning January 1, 2010. The adoption had no impact on the Company's consolidated financial position, results of operations or cash flows. Refer to Note 16 for further details regarding the Company's assets and liabilities measured at fair value.
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Costs | Advanced | |||||||||||||||||||||
Applicable to | Projects and | Pre-Tax | Total | Capital | ||||||||||||||||||
Sales | Sales | Amortization | Exploration | Income | Assets | Expenditures(1) | ||||||||||||||||
Year Ended December 31, 2010 | ||||||||||||||||||||||
Nevada | $ | 2,111 | $ | 974 | $ | 271 | $ | 85 | $ | 738 | $ | 3,387 | $ | 298 | ||||||||
La Herradura | 217 | 73 | 19 | 6 | 118 | 216 | 41 | |||||||||||||||
Hope Bay | - | - | 13 | 98 | (111) | 2,152 | 115 | |||||||||||||||
Other North America | - | - | 1 | 1 | (1) | 112 | - | |||||||||||||||
North America | 2,328 | 1,047 | 304 | 190 | 744 | 5,867 | 454 | |||||||||||||||
Yanacocha | 1,778 | 630 | 162 | 24 | 893 | 2,682 | 167 | |||||||||||||||
Other South America | - | - | 1 | 38 | (34) | 292 | 134 | |||||||||||||||
South America | 1,778 | 630 | 163 | 62 | 859 | 2,974 | 301 | |||||||||||||||
Boddington: | ||||||||||||||||||||||
Gold | 834 | 400 | 113 | |||||||||||||||||||
Copper | 162 | 93 | 25 | |||||||||||||||||||
Total Boddington | 996 | 493 | 138 | 6 | 304 | 4,323 | 146 | |||||||||||||||
Batu Hijau: | ||||||||||||||||||||||
Gold | 776 | 155 | 42 | |||||||||||||||||||
Copper | 1,686 | 337 | 90 | |||||||||||||||||||
Total Batu Hijau | 2,462 | 492 | 132 | 3 | 1,736 | 3,398 | 67 | |||||||||||||||
Other Australia/New Zealand | 1,321 | 585 | 108 | 31 | 575 | 1,025 | 176 | |||||||||||||||
Other Asia Pacific | - | - | 2 | 19 | (14) | 535 | 17 | |||||||||||||||
Asia Pacific | 4,779 | 1,570 | 380 | 59 | 2,601 | 9,281 | 406 | |||||||||||||||
Ahafo | 655 | 237 | 78 | 24 | 298 | 1,055 | 109 | |||||||||||||||
Other Africa | - | - | - | 9 | (10) | 291 | 70 | |||||||||||||||
Africa | 655 | 237 | 78 | 33 | 288 | 1,346 | 179 | |||||||||||||||
Corporate and Other | - | - | 20 | 90 | (495) | 6,195 | 34 | |||||||||||||||
Consolidated | $ | 9,540 | $ | 3,484 | $ | 945 | $ | 434 | $ | 3,997 | $ | 25,663 | $ | 1,374 | ||||||||
(1) | Accrual basis includes a decrease in accrued capital expenditures of $28; consolidated capital expenditures on a cash basis were $1402. |
Costs | Advanced | |||||||||||||||||||||
Applicable to | Projects and | Pre-Tax | Total | Capital | ||||||||||||||||||
Sales | Sales | Amortization | Exploration | Income | Assets | Expenditures(1) | ||||||||||||||||
Year Ended December 31, 2009 | ||||||||||||||||||||||
Nevada | $ | 1,943 | $ | 1,019 | $ | 261 | $ | 54 | $ | 583 | $ | 3,236 | $ | 205 | ||||||||
La Herradura | 113 | 42 | 11 | 3 | 57 | 137 | 54 | |||||||||||||||
Hope Bay | - | - | 12 | 66 | (77) | 1,862 | 5 | |||||||||||||||
Other North America | - | - | - | 2 | (7) | 55 | - | |||||||||||||||
North America | 2,056 | 1,061 | 284 | 125 | 556 | 5,290 | 264 | |||||||||||||||
Yanacocha | 2,013 | 642 | 168 | 23 | 1,089 | 2,472 | 119 | |||||||||||||||
Other South America | - | - | - | 23 | 1 | 32 | 27 | |||||||||||||||
South America | 2,013 | 642 | 168 | 46 | 1,090 | 2,504 | 146 | |||||||||||||||
Boddington | ||||||||||||||||||||||
Gold | 101 | 45 | 15 | |||||||||||||||||||
Copper | 27 | 16 | 4 | |||||||||||||||||||
Total Boddington | 128 | 61 | 19 | 32 | (59) | 3,975 | 1,093 | |||||||||||||||
Batu Hijau: | ||||||||||||||||||||||
Gold | 550 | 118 | 30 | |||||||||||||||||||
Copper | 1,292 | 307 | 78 | |||||||||||||||||||
Total Batu Hijau | 1,842 | 425 | 108 | - | 1,242 | 3,129 | 44 | |||||||||||||||
Other Australia/New Zealand | 1,138 | 577 | 136 | 21 | 374 | 870 | 122 | |||||||||||||||
Other Asia Pacific | - | - | 3 | 12 | (50) | 256 | 3 | |||||||||||||||
Asia Pacific | 3,108 | 1,063 | 266 | 65 | 1,507 | 8,230 | 1,262 | |||||||||||||||
Ahafo | 528 | 242 | 68 | 13 | 178 | 985 | 75 | |||||||||||||||
Other Africa | - | - | - | 10 | (7) | 202 | 10 | |||||||||||||||
Africa | 528 | 242 | 68 | 23 | 171 | 1,187 | 85 | |||||||||||||||
Corporate and Other | - | - | 20 | 63 | (370) | 5,088 | 16 | |||||||||||||||
Consolidated | $ | 7,705 | $ | 3,008 | $ | 806 | $ | 322 | $ | 2,954 | $ | 22,299 | $ | 1,773 | ||||||||
(1) | Accrual basis includes an increase in accrued capital expenditures of $4; consolidated capital expenditures on a cash basis were $1769. |
Costs | Advanced | |||||||||||||||||||||
Applicable to | Projects and | Pre-Tax | Total | Capital | ||||||||||||||||||
Sales | Sales | Amortization | Exploration | Income | Assets(1) | Expenditures(2) | ||||||||||||||||
Year Ended December 31, 2008 | ||||||||||||||||||||||
Nevada | $ | 1,929 | $ | 993 | $ | 246 | $ | 50 | $ | 591 | $ | 3,215 | $ | 299 | ||||||||
La Herradura | 83 | 38 | 8 | 6 | 32 | 90 | 27 | |||||||||||||||
Hope Bay | - | - | 1 | 59 | (59) | 1,621 | 82 | |||||||||||||||
Other North America | - | - | - | 29 | (163) | 52 | - | |||||||||||||||
North America | 2,012 | 1,031 | 255 | 144 | 401 | 4,978 | 408 | |||||||||||||||
Yanacocha | 1,613 | 637 | 170 | 28 | 694 | 1,902 | 202 | |||||||||||||||
Other South America | - | - | - | 38 | (8) | 30 | 34 | |||||||||||||||
South America | 1,613 | 637 | 170 | 66 | 686 | 1,932 | 236 | |||||||||||||||
Boddington | - | - | - | 10 | (13) | 1,735 | 815 | |||||||||||||||
Batu Hijau: | ||||||||||||||||||||||
Gold | 261 | 124 | 25 | |||||||||||||||||||
Copper | 752 | 399 | 80 | |||||||||||||||||||
Total Batu Hijau | 1,013 | 523 | 105 | 2 | 301 | 2,371 | 83 | |||||||||||||||
Other Australia/New Zealand | 1,050 | 642 | 122 | 24 | 268 | 819 | 130 | |||||||||||||||
Other Asia Pacific | - | - | 3 | 16 | (101) | 87 | 2 | |||||||||||||||
Asia Pacific | 2,063 | 1,165 | 230 | 52 | 455 | 5,012 | 1,030 | |||||||||||||||
Ahafo | 435 | 205 | 63 | 18 | 145 | 984 | 109 | |||||||||||||||
Other Africa | - | - | - | 31 | (31) | 197 | 2 | |||||||||||||||
Africa | 435 | 205 | 63 | 49 | 114 | 1,181 | 111 | |||||||||||||||
Corporate and Other | 1 | - | 20 | 68 | (362) | 2,624 | 20 | |||||||||||||||
Consolidated | $ | 6,124 | $ | 3,038 | $ | 738 | $ | 379 | $ | 1,294 | $ | 15,727 | $ | 1,805 | ||||||||
(1) | Corporate and Other includes $73 of Assets held for sale. | |||||||||||||||||||||
(2) | Accrual basis includes a decrease in accrued capital expenditures of $65; consolidated capital expenditures on a cash basis were $1870. |
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Write-down of property, plant and mine development: | |||||||||||
Nevada | $ | 4 | $ | 1 | $ | 4 | |||||
Yanacocha | - | 1 | - | ||||||||
Batu Hijau | 1 | 4 | 10 | ||||||||
Other Australia/New Zealand | 1 | 1 | 2 | ||||||||
Corporate and other | - | - | 121 | ||||||||
$ | 6 | $ | 7 | $ | 137 |
At December 31, | ||||||||
2010 | 2009 | |||||||
Stockpiles and ore on leach pads: | ||||||||
Nevada | $ | 479 | $ | 445 | ||||
La Herradura | 6 | 5 | ||||||
Yanacocha | 496 | 369 | ||||||
Boddington | 248 | 59 | ||||||
Batu Hijau | 879 | 834 | ||||||
Other Australia/New Zealand | 145 | 121 | ||||||
Ahafo | 121 | 72 | ||||||
$ | 2,374 | $ | 1,905 |
Revenues from export and domestic sales were as follows: | |||||||||||
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Europe | $ | 6,209 | $ | 5,573 | $ | 4,756 | |||||
Japan | 1,544 | 833 | 464 | ||||||||
Korea | 760 | 465 | 231 | ||||||||
Indonesia | 372 | 440 | 307 | ||||||||
Mexico | 217 | 113 | 83 | ||||||||
Australia | 110 | 222 | 170 | ||||||||
India | - | 30 | 32 | ||||||||
Other | 328 | 29 | 81 | ||||||||
$ | 9,540 | $ | 7,705 | $ | 6,124 |
At December 31, | |||||||
2010 | 2009 | ||||||
Australia | $ | 5,055 | $ | 4,683 | |||
United States | 3,031 | 3,059 | |||||
Canada | 2,088 | 1,869 | |||||
Indonesia | 2,109 | 2,067 | |||||
Peru | 1,772 | 1,443 | |||||
Ghana | 1,231 | 1,093 | |||||
Other | 94 | 70 | |||||
$ | 15,380 | $ | 14,284 |
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Balance January 1, 2009 | $ | 757 | ||||
Additions, changes in estimates and other | 105 | |||||
Liabilities settled | (49) | |||||
Accretion expense | 46 | |||||
Balance December 31, 2009 | 859 | |||||
Additions, changes in estimates and other | 188 | |||||
Liabilities settled | (51) | |||||
Accretion expense | 52 | |||||
Balance December 31, 2010 | $ | 1,048 |
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Reclamation | $ | 13 | $ | 13 | $ | 101 | |||||
Accretion - operating | 44 | 34 | 31 | ||||||||
Accretion - non-operating | 8 | 12 | 10 | ||||||||
$ | 65 | $ | 59 | $ | 142 |
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Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Major projects: | |||||||||||
Hope Bay | $ | 74 | $ | 25 | $ | 39 | |||||
Subika underground | 11 | 2 | - | ||||||||
Conga | 8 | 4 | 4 | ||||||||
Akyem | 5 | 8 | 7 | ||||||||
Boddington | - | 25 | 3 | ||||||||
Other projects: | |||||||||||
Technical and project services | 49 | 24 | 23 | ||||||||
Corporate | 29 | 14 | 15 | ||||||||
Other | 40 | 33 | 75 | ||||||||
$ | 216 | $ | 135 | $ | 166 | ||||||
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NOTE 6 OTHER EXPENSE, NET | |||||||||||
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Community development | $ | 111 | $ | 84 | $ | 87 | |||||
Regional administration | 64 | 55 | 48 | ||||||||
Western Australia power plant | 15 | 37 | 18 | ||||||||
World Gold Council dues | 13 | 11 | 10 | ||||||||
Batu Hijau divestiture | 4 | 12 | 15 | ||||||||
Revaluation of contingent consideration | 2 | 23 | - | ||||||||
Boddington acquisition costs | - | 67 | - | ||||||||
Other | 52 | 69 | 62 | ||||||||
$ | 261 | $ | 358 | $ | 240 |
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NOTE 7 OTHER INCOME, NET | |||||||||||
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Canadian Oil Sands Trust distributions | $ | 55 | $ | 26 | $ | 110 | |||||
Gain on asset sales, net | 48 | 16 | 42 | ||||||||
Income from developing projects, net | 18 | 4 | 12 | ||||||||
Gain on sale of investments, net | 16 | 8 | 30 | ||||||||
European Gold Refinery income | 14 | 14 | 4 | ||||||||
Interest income | 11 | 16 | 29 | ||||||||
Impairment of marketable securities | (1) | (6) | (114) | ||||||||
Foreign currency exchange losses, net | (64) | (1) | (12) | ||||||||
Other | 12 | 11 | 22 | ||||||||
$ | 109 | $ | 88 | $ | 123 | ||||||
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NOTE 8 EMPLOYEE RELATED BENEFITS | |||||||||
At December 31, | |||||||||
2010 | 2009 | ||||||||
Current: | |||||||||
Accrued payroll and withholding taxes | $ | 189 | $ | 152 | |||||
Peruvian workers’ participation | 49 | 59 | |||||||
Employee pension benefits | 6 | 4 | |||||||
Other post-retirement plans | 3 | 4 | |||||||
Accrued severance | 2 | 3 | |||||||
Other employee-related payables | 39 | 28 | |||||||
$ | 288 | $ | 250 | ||||||
At December 31, | |||||||||
2010 | 2009 | ||||||||
Long-term: | |||||||||
Employee pension benefits | $ | 127 | $ | 204 | |||||
Other post-retirement benefit plans | 92 | 91 | |||||||
Accrued severance | 73 | 57 | |||||||
Peruvian workers’ participation | 18 | 17 | |||||||
Other employee-related payables | 15 | 12 | |||||||
$ | 325 | $ | 381 |
Pension Benefits | Other Benefits | ||||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||||
Change in Benefit Obligation: | |||||||||||||||
Benefit obligation at beginning of year | $ | 580 | $ | 518 | $ | 95 | $ | 89 | |||||||
Service cost | 21 | 18 | 2 | 2 | |||||||||||
Interest cost | 36 | 32 | 6 | 5 | |||||||||||
Actuarial (gain) loss | 68 | 29 | (6) | 1 | |||||||||||
Amendments | 2 | - | - | - | |||||||||||
Foreign currency exchange loss | 2 | 5 | - | 1 | |||||||||||
Settlement payments | (1) | (1) | - | - | |||||||||||
Benefits paid | (27) | (21) | (2) | (3) | |||||||||||
Projected benefit obligation at end of year | $ | 681 | $ | 580 | N/A | N/A | |||||||||
Accumulated Benefit Obligation | $ | 543 | $ | 465 | $ | 95 | $ | 95 | |||||||
Change in Fair Value of Assets: | |||||||||||||||
Fair value of assets at beginning of year | $ | 372 | $ | 278 | $ | - | $ | - | |||||||
Actual return on plan assets | 53 | 61 | - | - | |||||||||||
Employer contributions | 161 | 55 | 2 | 3 | |||||||||||
Foreign currency exchange loss | 1 | - | - | - | |||||||||||
Settlement payments | (1) | (1) | - | - | |||||||||||
Benefits paid | (27) | (21) | (2) | (3) | |||||||||||
Fair value of assets at end of year | $ | 559 | $ | 372 | $ | - | $ | - | |||||||
Unfunded status, net | $ | 122 | $ | 208 | $ | 95 | $ | 95 |
Pension Benefits | Other Benefits | ||||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||||
Accrued employee benefit liability | $ | 122 | $ | 208 | $ | 95 | $ | 95 | |||||||
Accumulated other comprehensive income (loss): | |||||||||||||||
Net actuarial gain (loss) | $ | (263) | $ | (240) | $ | 12 | $ | 8 | |||||||
Prior service credit (cost) | (8) | (7) | 5 | 5 | |||||||||||
(271) | (247) | 17 | 13 | ||||||||||||
Less: Income taxes | 95 | 86 | (6) | (4) | |||||||||||
$ | (176) | $ | (161) | $ | 11 | $ | 9 |
Pension Benefit Costs | Other Benefit Costs | ||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||
Service cost | $ | 21 | $ | 18 | $ | 15 | $ | 2 | $ | 2 | $ | 2 | |||||||
Interest cost | 36 | 32 | 29 | 6 | 5 | 5 | |||||||||||||
Expected return on plan assets | (32) | (29) | (28) | - | - | - | |||||||||||||
Amortization, net | 17 | 16 | 4 | (1) | (1) | (3) | |||||||||||||
Settlements | - | - | 13 | - | - | - | |||||||||||||
$ | 42 | $ | 37 | $ | 33 | $ | 7 | $ | 6 | $ | 4 |
Pension Benefits | Other Benefits | ||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||
Net gain (loss) | $ | (41) | $ | 7 | $ | (196) | $ | 5 | $ | (1) | $ | (17) | |||||||
Amortization, net | 17 | 16 | 17 | (1) | (1) | (3) | |||||||||||||
Total recognized in Other comprehensive income (loss) | $ | (24) | $ | 23 | $ | (179) | $ | 4 | $ | (2) | $ | (20) | |||||||
Total recognized in net periodic benefit cost and Other comprehensive income (loss) | $ | (66) | $ | (14) | $ | (212) | $ | (3) | $ | (7) | $ | (24) |
Significant assumptions were as follows: | |||||||||||||||
Pension Benefits | Other Benefits | ||||||||||||||
At December 31, | At December 31, | ||||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||||
Weighted-average assumptions used in measuring the Company’s benefit obligation: | |||||||||||||||
Discount rate | 5.75 | % | 6.10 | % | 5.75 | % | 6.10 | % | |||||||
Rate of compensation increase | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % |
Pension Benefits | Other Benefits | ||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||
Weighted-average assumptions used in measuring the net periodic pension benefit cost: | |||||||||||||||||||||
Discount long-term rate | 6.10 | % | 6.05 | % | 6.80 | % | 6.10 | % | 6.05 | % | 6.80 | % | |||||||||
Expected return on plan assets | 8.00 | % | 8.00 | % | 8.00 | % | N/A | N/A | N/A | ||||||||||||
Rate of compensation increase | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % |
Actual at | ||||||||
December 31, | ||||||||
Asset Allocation | Target | 2010 | ||||||
U.S. equity investments | 40 | % | 40 | % | ||||
International equity investments | 25 | % | 25 | % | ||||
Fixed income investments | 30 | % | 35 | % | ||||
Cash | 5 | % | - | % |
Fair Value at December 31, 2010 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Plan Assets: | |||||||||||||||
Cash and cash equivalents | $ | 2 | $ | - | $ | - | $ | 2 | |||||||
Commingled funds | - | 557 | - | 557 | |||||||||||
$ | 2 | $ | 557 | $ | - | $ | 559 | ||||||||
Fair Value at December 31, 2009 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Plan Assets: | |||||||||||||||
Cash and cash equivalents | $ | 21 | $ | - | $ | - | $ | 21 | |||||||
Commingled funds | - | 351 | - | 351 | |||||||||||
$ | 21 | $ | 351 | $ | - | $ | 372 |
One-percentage-point | One-percentage-point | |||||||
Increase | Decrease | |||||||
Effect on total of service and interest cost components of net periodic post-retirement health care benefit cost | $ | 1 | $ | (1) | ||||
Effect on the health care component of the accumulated post-retirement benefit obligation | $ | 15 | $ | (12) |
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2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||
Weighted-average risk-free interest rate | 2.5 | % | 2.0 | % | 3.1 | % | 4.6 | % | 4.9 | % | ||||||
Dividend yield | 0.7 | % | 1.0 | % | 1.0 | % | 1.0 | % | 0.7 | % | ||||||
Expected life in years | 5 | 5 | 5 | 5 | 5 | |||||||||||
Volatility | 38 | % | 36 | % | 30 | % | 32 | % | 34 | % |
The following table summarizes annual activity for all stock options for each of the three years ended December 31: | |||||||||||||||||||
2010 | 2009 | 2008 | |||||||||||||||||
Number of Shares | Weighted Average Exercise Price | Number of Shares | Weighted Average Exercise Price | Number of Shares | Weighted Average Exercise Price | ||||||||||||||
Outstanding at beginning of year | 6,142,073 | $ | 42.65 | 6,463,004 | $ | 42.17 | 6,234,814 | $ | 41.09 | ||||||||||
Granted | 918,343 | $ | 55.68 | 1,157,825 | $ | 39.99 | 1,416,963 | $ | 40.77 | ||||||||||
Exercised | (1,494,686) | $ | 40.38 | (1,204,836) | $ | 36.24 | (931,741) | $ | 30.88 | ||||||||||
Forfeited and expired | (151,525) | $ | 51.02 | (273,920) | $ | 50.20 | (257,032) | $ | 49.17 | ||||||||||
Outstanding at end of year | 5,414,205 | $ | 45.36 | 6,142,073 | $ | 42.65 | 6,463,004 | $ | 42.17 | ||||||||||
Options exercisable at year-end | 3,211,115 | $ | 45.50 | 3,880,866 | $ | 44.39 | 4,464,475 | $ | 42.01 | ||||||||||
Weighted-average fair value of | |||||||||||||||||||
options granted during the year | $ | 20.01 | $ | 12.88 | $ | 11.96 |
The following table summarizes information about stock options outstanding and exercisable at December 31, 2010: | |||||||||||||
Options Outstanding | Options Exercisable | ||||||||||||
Range of Exercise Prices | Number Outstanding | Weighted-Average Remaining Contractual Life (in years) | Weighted-Average Exercise Price | Number Exercisable | Weighted-Average Exercise Price | ||||||||
$20 to $30 | 480,573 | 5.6 | $ | 26.74 | 180,573 | $ | 26.47 | ||||||
$30 to $40 | 1,197,686 | 7.6 | $ | 39.60 | 480,164 | $ | 39.08 | ||||||
$40 to $50 | 2,175,950 | 5.5 | $ | 44.62 | 1,884,578 | $ | 44.65 | ||||||
$50+ | 1,559,996 | 7.6 | $ | 56.54 | 665,800 | $ | 57.71 | ||||||
5,414,205 | 6.6 | $ | 45.36 | 3,211,115 | $ | 45.50 |
2010 | 2009 | 2008 | ||||||||
Stock options vested | 922,463 | 795,566 | 835,982 | |||||||
Weighted-average exercise price | $ | 42.16 | $ | 46.86 | $ | 47.21 |
Years Ended December 31, | ||||||||||
2010 | 2009 | 2008 | ||||||||
Stock options | $ | 16 | $ | 14 | $ | 16 | ||||
Restricted stock units | 16 | 6 | - | |||||||
Performance leveraged stock units | 7 | - | - | |||||||
Common stock | 3 | 3 | - | |||||||
Restricted stock | 2 | 4 | 6 | |||||||
Deferred stock | 8 | 13 | 12 | |||||||
$ | 52 | $ | 40 | $ | 34 |
|
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Current: | |||||||||||
United States | $ | (214) | $ | (46) | $ | (104) | |||||
Foreign | (1,022) | (782) | (353) | ||||||||
(1,236) | (828) | (457) | |||||||||
Deferred: | |||||||||||
United States | 518 | 42 | 246 | ||||||||
Foreign | (138) | (43) | 69 | ||||||||
380 | (1) | 315 | |||||||||
$ | (856) | $ | (829) | $ | (142) |
Years Ended December 31, | ||||||||||
2010 | 2009 | 2008 | ||||||||
United States | $ | 737 | $ | 291 | $ | 563 | ||||
Foreign | 3,260 | 2,663 | 731 | |||||||
$ | 3,997 | $ | 2,954 | $ | 1,294 |
Years Ended December 31, | |||||||||||||
2010 | 2009 | 2008 | |||||||||||
Income before income and mining tax and other items | $ | 3,997 | $ | 2,954 | $ | 1,294 | |||||||
United States statutory corporate income tax rate | 35 | % | 35 | % | 35 | % | |||||||
Income tax expense computed at United States statutory corporate income tax rate | |||||||||||||
statutory corporate income tax rate | (1,399) | (1,034) | (453) | ||||||||||
Reconciling items: | |||||||||||||
Tax benefit generated on change in form of a non- | 440 | - | 159 | ||||||||||
U.S. subsidiary | |||||||||||||
Percentage depletion | 151 | 127 | 130 | ||||||||||
Resolution of prior years’ uncertain income tax matters | 11 | 38 | 69 | ||||||||||
Change in valuation allowance on deferred tax assets | 18 | 32 | (31) | ||||||||||
Mining taxes (net of federal benefit) | (33) | (27) | (27) | ||||||||||
Other | (44) | 35 | 11 | ||||||||||
Income and mining tax expense | $ | (856) | $ | (829) | $ | (142) |
Components of the Company's deferred income tax assets (liabilities) are as follows: | |||||||||
At December 31, | |||||||||
2010 | 2009 | ||||||||
Deferred income tax assets: | |||||||||
Exploration costs | $ | 75 | $ | 72 | |||||
Depreciation | 6 | 21 | |||||||
Net operating losses and tax credits | 799 | 980 | |||||||
Retiree benefit and vacation accrual costs | 98 | 124 | |||||||
Remediation and reclamation costs | 158 | 132 | |||||||
Investment in partnerships | 563 | 57 | |||||||
Other | 103 | 64 | |||||||
1,802 | 1,450 | ||||||||
Valuation allowances | (435) | (437) | |||||||
1,367 | 1,013 | ||||||||
Deferred income tax liabilities: | |||||||||
Net undistributed earnings of subsidiaries | (237) | (218) | |||||||
Unrealized gain on investments | (176) | (137) | |||||||
Depletable and amortizable costs associated with mineral rights | (857) | (826) | |||||||
Derivative instruments | (25) | (37) | |||||||
Other | - | (1) | |||||||
(1,295) | (1,219) | ||||||||
Net deferred income tax assets (liabilities) | $ | 72 | $ | (206) |
Net deferred income tax assets and liabilities consist of: | ||||||||
At December 31, | ||||||||
2010 | 2009 | |||||||
Current deferred income tax assets | $ | 177 | $ | 215 | ||||
Long-term deferred income tax assets | 1,437 | 937 | ||||||
Current deferred income tax liabilities | (54) | (17) | ||||||
Long-term deferred income tax liabilities | (1,488) | (1,341) | ||||||
$ | 72 | $ | (206) |
2010 | 2009 | 2008 | |||||||||
Total amount of gross unrecognized tax benefits at | |||||||||||
beginning of year | $ | 130 | $ | 181 | $ | 230 | |||||
Additions for tax positions of prior years | 3 | (21) | 29 | ||||||||
Additions for tax positions of current year | - | 3 | 50 | ||||||||
Reductions due to settlements with taxing authorities | (9) | (27) | (57) | ||||||||
Reductions due to lapse of statute of limitations | (8) | (6) | (71) | ||||||||
Total amount of gross unrecognized tax benefits at end of | |||||||||||
year | $ | 116 | $ | 130 | $ | 181 |
|
NOTE 11 EQUITY INCOME (LOSS) OF AFFILIATES | ||||||||||
Years Ended December 31, | ||||||||||
2010 | 2009 | 2008 | ||||||||
AGR Matthey Joint Venture | $ | 3 | $ | 5 | $ | (2) | ||||
Regis Resources Ltd. | - | - | (3) | |||||||
Minera La Zanja S.R.L. | 10 | (4) | - | |||||||
Euronimba Ltd. | (10) | (17) | - | |||||||
$ | 3 | $ | (16) | $ | (5) |
|
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Sales | $ | - | $ | 32 | $ | 75 | |||||
Income (loss) from operations: | |||||||||||
Kori Kollo | $ | - | $ | 1 | $ | (9) | |||||
Other | - | - | 6 | ||||||||
- | 1 | (3) | |||||||||
Non-operating gain (loss) | (40) | (44) | 1 | ||||||||
Pre-tax income (loss) | (40) | (43) | (2) | ||||||||
Income tax benefit | 12 | 27 | 15 | ||||||||
Income (loss) from discontinued operations | $ | (28) | $ | (16) | $ | 13 |
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Net cash provided from (used in) discontinued operations: | |||||||||||
Income (loss) from discontinued operations | $ | (28) | $ | (16) | $ | 13 | |||||
Amortization | - | 3 | 9 | ||||||||
Deferred income taxes | (12) | (28) | 4 | ||||||||
Impairment of assets held for sale | - | 44 | - | ||||||||
Other operating adjustments and write-downs | - | 7 | 19 | ||||||||
Increase (decrease) in net operating liabilities | 27 | 23 | (149) | ||||||||
$ | (13) | $ | 33 | $ | (104) | ||||||
Net cash used in investing activities of discontinued operations: | |||||||||||
Proceeds from asset sales, net | $ | - | $ | - | $ | (6) | |||||
Additions to property, plant and mine development | - | - | (5) | ||||||||
$ | - | $ | - | $ | (11) | ||||||
Net cash used in financing activities of discontinued operations: | |||||||||||
Repayment of debt | $ | - | $ | (2) | $ | (4) | |||||
$ | - | $ | (2) | $ | (4) |
|
NOTE 13 NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | |||||||||||
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Batu Hijau | $ | 549 | $ | 445 | $ | 98 | |||||
Yanacocha | 292 | 354 | 232 | ||||||||
Other | (2) | (3) | (1) | ||||||||
$ | 839 | $ | 796 | $ | 329 |
|
Assets: | |||||
Cash | $ | 1 | |||
Property, plant and mine development, net | 1,073 | ||||
Inventories and stockpiles | 7 | ||||
Other assets | 11 | ||||
$ | 1,092 | ||||
Liabilities: | |||||
Accrued liabilities | $ | 33 | |||
Reclamation liabilities | 15 | ||||
48 | |||||
Net assets acquired | $ | 1,044 |
|
Fair Value at December 31, 2010 | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 2,316 | $ | 2,316 | $ | - | $ | - | |||||||
Marketable equity securities: | |||||||||||||||
Extractive industries | 1,573 | 1,573 | - | - | |||||||||||
Other | 6 | 6 | - | - | |||||||||||
Marketable debt securities: | |||||||||||||||
Asset backed commercial paper | 19 | - | - | 19 | |||||||||||
Corporate | 10 | 10 | - | - | |||||||||||
Auction rate securities | 5 | - | - | 5 | |||||||||||
Trade receivable from provisional copper | 412 | 412 | - | - | |||||||||||
and gold concentrate sales, net | |||||||||||||||
Derivative instruments, net: | |||||||||||||||
Foreign exchange forward contracts | 301 | - | 301 | - | |||||||||||
Diesel forward contracts | 8 | - | 8 | - | |||||||||||
Interest rate swap contracts | 3 | - | 3 | - | |||||||||||
$ | 4,653 | $ | 4,317 | $ | 312 | $ | 24 | ||||||||
Liabilities: | |||||||||||||||
8 5/8% debentures ($222 hedged portion) | $ | 228 | $ | - | $ | 228 | $ | - | |||||||
Boddington contingent consideration | 83 | - | - | 83 | |||||||||||
$ | 311 | $ | - | $ | 228 | $ | 83 |
Auction Rate Securities | Asset Backed Commercial Paper | Total Assets | Boddington Contingent Consideration | Total Liabilities | ||||||||||||||
Balance at beginning of period | $ | 5 | $ | 18 | $ | 23 | $ | 85 | $ | 85 | ||||||||
Unrealized gain | - | 1 | 1 | - | - | |||||||||||||
Revaluation | - | - | - | 2 | 2 | |||||||||||||
Settlements | - | - | - | (4) | (4) | |||||||||||||
Balance at end of period | $ | 5 | $ | 19 | $ | 24 | $ | 83 | $ | 83 |
|
Expected Maturity Date | |||||||||||||||||||||
Total/ | |||||||||||||||||||||
2011 | 2012 | 2013 | 2014 | 2015 | Average | ||||||||||||||||
A$ Fixed Forward Contracts: | |||||||||||||||||||||
A$ notional (millions) | 1,026 | 631 | 314 | 221 | 99 | 2,291 | |||||||||||||||
Average rate ($/A$) | 0.82 | 0.84 | 0.84 | 0.83 | 0.80 | 0.83 | |||||||||||||||
Expected hedge ratio | 72 | % | 45 | % | 22 | % | 17 | % | 8 | % | 34 | % | |||||||||
NZ$ Fixed Forward Contracts: | |||||||||||||||||||||
NZ$ notional (millions) | 67 | 23 | - | - | - | 90 | |||||||||||||||
Average rate ($/NZ$) | 0.69 | 0.69 | - | - | - | 0.69 | |||||||||||||||
Expected hedge ratio | 57 | % | 22 | % | - | % | - | % | - | % | 40 | % |
Expected Maturity Date | ||||||||||||
Total/ | ||||||||||||
2011 | 2012 | Average | ||||||||||
Diesel Fixed Forward Contracts: | ||||||||||||
Diesel gallons (millions) | 21 | 7 | 28 | |||||||||
Average rate ($/gallon) | 2.28 | 2.44 | 2.32 | |||||||||
Expected Nevada hedge ratio | 50 | % | 18 | % | 34 | % |
Fair Values of Derivative Instruments | ||||||||||||||
At December 31, 2010 | ||||||||||||||
Other Current Assets | Other Long-Term Assets | Other Current Liabilities | Other Long-Term Liabilities | |||||||||||
Foreign currency exchange contracts: | ||||||||||||||
A$ fixed forward contracts | $ | 181 | $ | 114 | $ | - | $ | - | ||||||
NZ$ fixed forward contracts | 5 | 1 | - | - | ||||||||||
Diesel fixed forward contracts | 7 | 1 | - | - | ||||||||||
Interest rate swap contracts | 3 | - | - | - | ||||||||||
Total derivative instruments (Note 21) | $ | 196 | $ | 116 | $ | - | $ | - | ||||||
Fair Values of Derivative Instruments | ||||||||||||||
At December 31, 2009 | ||||||||||||||
Other Current Assets | Other Long-Term Assets | Other Current Liabilities | Other Long-Term Liabilities | |||||||||||
Foreign currency exchange contracts: | ||||||||||||||
A$ fixed forward contracts | $ | 78 | $ | 53 | $ | - | $ | 1 | ||||||
NZ$ fixed forward contracts | 5 | 1 | - | - | ||||||||||
IDR fixed forward contracts | 1 | - | - | - | ||||||||||
Diesel fixed forward contracts | 5 | 1 | - | - | ||||||||||
Interest rate swap contracts | 3 | 4 | - | - | ||||||||||
Total derivative instruments (Note 21) | $ | 92 | $ | 59 | $ | - | $ | 1 |
Foreign Currency Exchange Contracts | Diesel Forward Contracts | |||||||||||||||||||||||||||
For the years ended December 31, | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||||||
Cash flow hedging relationships: | ||||||||||||||||||||||||||||
Gain (loss) recognized in other comprehensive income (effective portion) | $ | 287 | $ | 245 | $ | (166) | $ | 6 | $ | 7 | $ | (18) | ||||||||||||||||
(1)? | $ | 92 | $ | (6) | $ | (17) | $ | 4 | $ | (11) | $ | (4) | ||||||||||||||||
Treasury Rate Lock Contracts | ||||||||||||||||||||||||||||
2010 | 2009 | 2008 | ||||||||||||||||||||||||||
Cash flow hedging relationships: | ||||||||||||||||||||||||||||
Gain (loss) recognized in other comprehensive income (effective portion) (2)? | $ | - | $ | 11 | $ | - |
(1) The gain (loss) for the effective portion of foreign currency exchange and diesel cash flow hedges reclassified from Accumulated other comprehensive income is included in Costs applicable to sales.
(2) The gain for the effective portion of treasury rate lock cash flow hedges reclassified from Accumulated other comprehensive income is recorded in Interest expense, net.
Interest Rate Swap Contracts | 8 5/8% Debentures (Hedged Portion) | |||||||||||||||||
For the years ended December 31, | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||
Fair value hedging relationships: | ||||||||||||||||||
Gain (loss) recognized in income (effective portion) (1)? | $ | 6 | $ | 4 | $ | 2 | $ | - | $ | (1) | $ | (2) | ||||||
Gain (loss) recognized in income (ineffective portion) (2)? | $ | (4) | $ | (3) | $ | 4 | $ | 2 | $ | (3) | $ | 6 |
(1) The gain (loss) recognized for the effective portion of fair value hedges and the underlying hedged debt is included in Interest expense, net.
(2) The ineffective portion recognized for fair value hedges and the underlying hedged debt is included in Other income, net.
|
NOTE 18 INVESTMENTS | ||||||||||||||||
At December 31, 2010 | ||||||||||||||||
Cost/Equity | Unrealized | Fair/Equity | ||||||||||||||
Basis | Gain | Loss | Basis | |||||||||||||
Current: | ||||||||||||||||
Marketable Equity Securities: | ||||||||||||||||
New Gold Inc. | 5 | 54 | - | 59 | ||||||||||||
Other | 19 | 35 | - | 54 | ||||||||||||
$ | 24 | $ | 89 | $ | - | $ | 113 | |||||||||
Long-term: | ||||||||||||||||
Marketable Debt Securities: | ||||||||||||||||
Asset backed commercial paper | $ | 25 | $ | - | $ | (6) | $ | 19 | ||||||||
Auction rate securities | 7 | - | (2) | 5 | ||||||||||||
Corporate | 7 | 3 | - | 10 | ||||||||||||
39 | 3 | (8) | 34 | |||||||||||||
Marketable Equity Securities: | ||||||||||||||||
Canadian Oil Sands Trust | 308 | 508 | - | 816 | ||||||||||||
Gabriel Resources Ltd. | 78 | 325 | - | 403 | ||||||||||||
Regis Resources Ltd. | 23 | 148 | - | 171 | ||||||||||||
Other | 39 | 37 | - | 76 | ||||||||||||
448 | 1,018 | - | 1,466 | |||||||||||||
Other investments, at cost | 11 | - | - | 11 | ||||||||||||
Investment in Affiliates: | ||||||||||||||||
La Zanja | 57 | - | - | 57 | ||||||||||||
$ | 555 | $ | 1,021 | $ | (8) | $ | 1,568 | |||||||||
At December 31, 2009 | ||||||||||||||||
Cost/Equity | Unrealized | Fair/Equity | ||||||||||||||
Basis | Gain | Loss | Basis | |||||||||||||
Current: | ||||||||||||||||
Marketable Equity Securities: | ||||||||||||||||
Regis Resources Ltd. | $ | 5 | $ | 29 | $ | - | $ | 34 | ||||||||
Other | 10 | 12 | - | 22 | ||||||||||||
$ | 15 | $ | 41 | $ | - | $ | 56 | |||||||||
Long-term: | ||||||||||||||||
Marketable Debt Securities: | ||||||||||||||||
Asset backed commercial paper | $ | 24 | $ | - | $ | (6) | $ | 18 | ||||||||
Auction rate securities | 7 | - | (2) | 5 | ||||||||||||
Corporate | 8 | 2 | - | 10 | ||||||||||||
39 | 2 | (8) | 33 | |||||||||||||
Marketable Equity Securities: | ||||||||||||||||
Canadian Oil Sands Trust | 292 | 584 | - | 876 | ||||||||||||
Gabriel Resources Ltd. | 74 | 136 | - | 210 | ||||||||||||
Other | 15 | 18 | - | 33 | ||||||||||||
381 | 738 | - | 1,119 | |||||||||||||
Other investments, at cost | 6 | - | - | 6 | ||||||||||||
Investment in Affiliates: | ||||||||||||||||
AGR Matthey Joint Venture | 20 | - | - | 20 | ||||||||||||
La Zanja | 8 | - | - | 8 | ||||||||||||
$ | 454 | $ | 740 | $ | (8) | $ | 1,186 |
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||
At December 31, 2010 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||
Asset backed commercial paper | $ | - | $ | - | $ | 19 | $ | 6 | $ | 19 | $ | 6 | |||||
Auction rate securities | - | - | 5 | 2 | 5 | 2 | |||||||||||
$ | - | $ | - | $ | 24 | $ | 8 | $ | 24 | $ | 8 | ||||||
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||
At December 31, 2009 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||
Asset backed commercial paper | $ | - | $ | - | $ | 18 | $ | 6 | $ | 18 | $ | 6 | |||||
Auction rate securities | - | - | 5 | 2 | 5 | 2 | |||||||||||
$ | - | $ | - | $ | 23 | $ | 8 | $ | 23 | $ | 8 |
|
NOTE 19 INVENTORIES | ||||||||
At December 31, | ||||||||
2010 | 2009 | |||||||
In-process | $ | 142 | $ | 80 | ||||
Concentrate | 111 | 10 | ||||||
Precious metals | 4 | 9 | ||||||
Materials, supplies and other | 401 | 394 | ||||||
$ | 658 | $ | 493 |
|
NOTE 20 STOCKPILES AND ORE ON LEACH PADS | ||||||||
At December 31, | ||||||||
2010 | 2009 | |||||||
Current: | ||||||||
Stockpiles | $ | 389 | $ | 206 | ||||
Ore on leach pads | 228 | 197 | ||||||
$ | 617 | $ | 403 | |||||
Long-term: | ||||||||
Stockpiles | $ | 1,397 | $ | 1,181 | ||||
Ore on leach pads | 360 | 321 | ||||||
$ | 1,757 | $ | 1,502 |
|
NOTE 21 OTHER ASSETS | ||||||||
At December 31, | ||||||||
2010 | 2009 | |||||||
Other current assets: | ||||||||
Refinery metal inventory and receivable | $ | 617 | $ | 671 | ||||
Derivative instruments | 196 | 92 | ||||||
Other prepaid assets | 65 | 70 | ||||||
Other | 84 | 67 | ||||||
$ | 962 | $ | 900 | |||||
Other long-term assets: | ||||||||
Goodwill | $ | 188 | $ | 188 | ||||
Income tax receivable | 119 | - | ||||||
Derivative instruments | 116 | 59 | ||||||
Intangible assets | 91 | 29 | ||||||
Debt issuance costs | 39 | 50 | ||||||
Restricted cash | 25 | 70 | ||||||
Other receivables | 19 | 16 | ||||||
Other | 144 | 70 | ||||||
$ | 741 | $ | 482 |
|
NOTE 22 PROPERTY, PLANT AND MINE DEVELOPMENT | |||||||||||||||||||||
At December 31, 2010 | At December 31, 2009 | ||||||||||||||||||||
Depreciable | Accumulated | Net Book | Accumulated | Net Book | |||||||||||||||||
Life | Cost | Amortization | Value | Cost | Amortization | Value | |||||||||||||||
(in years) | |||||||||||||||||||||
Land | — | $ | 118 | $ | - | $ | 118 | $ | 111 | $ | - | $ | 111 | ||||||||
Facilities and equipment | 1- | 27 | 12,424 | (5,460) | 6,964 | 12,099 | (4,816) | 7,283 | |||||||||||||
Mine development | 1- | 27 | 3,217 | (1,445) | 1,772 | 2,696 | (1,181) | 1,515 | |||||||||||||
Mineral interests | 1- | 27 | 3,463 | (667) | 2,796 | 3,380 | (608) | 2,772 | |||||||||||||
Asset retirement cost | 1- | 27 | 638 | (238) | 400 | 462 | (210) | 252 | |||||||||||||
Construction-in-progress | — | 857 | - | 857 | 437 | - | 437 | ||||||||||||||
$ | 20,717 | $ | (7,810) | $ | 12,907 | $ | 19,185 | $ | (6,815) | $ | 12,370 | ||||||||||
Leased assets included above in facilities and equipment | 2- | 25 | $ | 421 | $ | (289) | $ | 132 | $ | 421 | $ | (275) | $ | 146 | |||||||
At December 31, 2010 | At December 31, 2009 | ||||||||||||||||||||
Mineral Interests | Gross | Gross | |||||||||||||||||||
Amortization | Carrying | Accumulated | Net Book | Carrying | Accumulated | Net Book | |||||||||||||||
Period | Value | Amortization | Value | Value | Amortization | Value | |||||||||||||||
(in years) | |||||||||||||||||||||
Production stage | 1- | 27 | $ | 1,235 | $ | (660) | $ | 575 | $ | 1,207 | $ | (601) | $ | 606 | |||||||
Development stage | — | 149 | - | 149 | 155 | - | 155 | ||||||||||||||
Exploration stage | 1- | 27 | 2,079 | (7) | 2,072 | 2,018 | (7) | 2,011 | |||||||||||||
$ | 3,463 | $ | (667) | $ | 2,796 | $ | 3,380 | $ | (608) | $ | 2,772 |
|
NOTE 23 DEBT | ||||||||||||
At December 31, 2010 | At December 31, 2009 | |||||||||||
Current | Non-Current | Current | Non-Current | |||||||||
Sale-leaseback of refractory ore treatment plant | $ | 30 | $ | 134 | $ | 24 | $ | 164 | ||||
8 5/8% debentures, net of discount (due 2011) | 217 | - | - | 218 | ||||||||
2012 convertible senior notes, net of discount | - | 488 | - | 463 | ||||||||
2014 convertible senior notes, net of discount | - | 489 | - | 468 | ||||||||
2017 convertible senior notes, net of discount | - | 434 | - | 417 | ||||||||
2019 senior notes, net of discount | - | 896 | - | 896 | ||||||||
2035 senior notes, net of discount | - | 598 | - | 597 | ||||||||
2039 senior notes, net of discount | - | 1,087 | - | 1,087 | ||||||||
PTNNT project financing facility | - | - | 87 | 133 | ||||||||
Yanacocha credit facility and senior notes | - | - | 22 | 140 | ||||||||
Ahafo project facility | 10 | 55 | 10 | 65 | ||||||||
Other capital leases | 2 | 1 | 14 | 4 | ||||||||
$ | 259 | $ | 4,182 | $ | 157 | $ | 4,652 |
At December 31, 2010 | At December 31, 2009 | ||||||||||||||||
Convertible Senior Notes Due | Convertible Senior Notes Due | ||||||||||||||||
2012 | 2014 | 2017 | 2012 | 2014 | 2017 | ||||||||||||
Additional paid-in capital | $ | 46 | $ | 97 | $ | 123 | $ | 46 | $ | 97 | $ | 123 | |||||
Principal amount | $ | 518 | $ | 575 | $ | 575 | $ | 518 | $ | 575 | $ | 575 | |||||
Unamortized debt discount | (30) | (86) | (141) | (55) | (107) | (158) | |||||||||||
Net carrying amount | $ | 488 | $ | 489 | $ | 434 | $ | 463 | $ | 468 | $ | 417 |
|
NOTE 24 OTHER LIABILITIES | ||||||||
At December 31, | ||||||||
2010 | 2009 | |||||||
Other current liabilities: | ||||||||
Refinery metal payable | $ | 617 | $ | 671 | ||||
Accrued operating costs | 217 | 131 | ||||||
Taxes other than income and mining | 135 | 73 | ||||||
Royalties | 90 | 58 | ||||||
Accrued capital expenditures | 83 | 115 | ||||||
Interest | 66 | 72 | ||||||
Reclamation and remediation liabilities | 64 | 54 | ||||||
Deferred income tax | 54 | 17 | ||||||
Boddington contingent consideration | 32 | 16 | ||||||
Other | 60 | 110 | ||||||
$ | 1,418 | $ | 1,317 | |||||
Other long-term liabilities: | ||||||||
Boddington contingent consideration | $ | 51 | $ | 69 | ||||
Power supply agreements | 45 | - | ||||||
Income and mining taxes | 36 | 38 | ||||||
Other | 89 | 80 | ||||||
$ | 221 | $ | 187 |
|
NOTE 25 ACCUMULATED OTHER COMPREHENSIVE INCOME | ||||||||
At December 31, 2010 | ||||||||
2010 | 2009 | |||||||
Unrealized gain on marketable securities, net of $200 and $138 tax expense, respectively | $ | 902 | $ | 635 | ||||
Foreign currency translation adjustments | 155 | 57 | ||||||
Pension liability adjustments, net of $95 and $86 tax benefit, respectively | (176) | (161) | ||||||
Other post-retirement benefit adjustments, net of $6 and $4 tax expense, respectively | 11 | 9 | ||||||
Changes in fair value of cash flow hedge instruments, net of tax expense and noncontrolling interests of $97 and $38, respectively | 216 | 86 | ||||||
$ | 1,108 | $ | 626 |
|
NOTE 26 RELATED PARTY TRANSACTIONS | ||||||||||||
Newmont had transactions with AGR, as follows: | ||||||||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Gold and silver sales | $ | 3 | $ | 10 | $ | 10 | ||||||
Refining fees paid | $ | - | $ | 3 | $ | 3 | ||||||
See Note 11 for a discussion of Newmont's investment in AGR. |
|
Years Ended December 31, | |||||||||||
2010 | 2009 | 2008 | |||||||||
Decrease (increase) in operating assets: | |||||||||||
Trade and accounts receivable | $ | (153) | $ | 42 | $ | 81 | |||||
Inventories, stockpiles and ore on leach pads | (501) | (378) | (343) | ||||||||
EGR refinery assets | 116 | (508) | 38 | ||||||||
Other assets | (87) | (19) | (208) | ||||||||
Increase (decrease) in operating liabilities: | |||||||||||
Accounts payable and other accrued liabilities | 38 | 177 | (54) | ||||||||
EGR refinery liabilities | (116) | 508 | (38) | ||||||||
Reclamation liabilities | (51) | (49) | (103) | ||||||||
$ | (754) | $ | (227) | $ | (627) |
|
NOTE 28 SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||||
Years Ended December 31, | ||||||||||
2010 | 2009 | 2008 | ||||||||
Income and mining taxes, net of refunds | $ | 1,185 | $ | 431 | $ | 816 | ||||
Pension plan and other benefit contributions | $ | 163 | $ | 58 | $ | 76 | ||||
Interest, net of amounts capitalized | $ | 228 | $ | 117 | $ | 96 |
|
Years Ended December 31, 2010 | |||||||||||||||||
Newmont | |||||||||||||||||
Newmont | Mining | ||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||
Condensed Consolidating Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||
Sales | $ | - | $ | 6,568 | $ | 2,972 | $ | - | $ | 9,540 | |||||||
Costs and expenses | |||||||||||||||||
Costs applicable to sales (1) | - | 2,171 | 1,341 | (28) | 3,484 | ||||||||||||
Amortization | - | 601 | 345 | (1) | 945 | ||||||||||||
Reclamation and remediation | - | 48 | 17 | - | 65 | ||||||||||||
Exploration | - | 131 | 87 | - | 218 | ||||||||||||
Advanced projects, research and development | - | 110 | 107 | (1) | 216 | ||||||||||||
General and administrative | - | 144 | 4 | 30 | 178 | ||||||||||||
Write-down of property, plant and mine | |||||||||||||||||
development | - | 5 | 1 | - | 6 | ||||||||||||
Other expense, net | - | 183 | 78 | - | 261 | ||||||||||||
- | 3,393 | 1,980 | - | 5,373 | |||||||||||||
Other income (expense) | |||||||||||||||||
Other income, net | (4) | 29 | 84 | - | 109 | ||||||||||||
Interest income - intercompany | 161 | 7 | 5 | (173) | - | ||||||||||||
Interest expense - intercompany | (11) | - | (162) | 173 | - | ||||||||||||
Interest expense, net | (246) | (27) | (6) | - | (279) | ||||||||||||
(100) | 9 | (79) | - | (170) | |||||||||||||
Income before income and mining tax and other items | (100) | 3,184 | 913 | - | 3,997 | ||||||||||||
Income and mining tax expense | 479 | (1,114) | (221) | - | (856) | ||||||||||||
Equity income (loss) of affiliates | 1,926 | 2 | 281 | (2,206) | 3 | ||||||||||||
Income from continuing operations | 2,305 | 2,072 | 973 | (2,206) | 3,144 | ||||||||||||
Income (loss) from discontinued operations | (28) | 2 | (30) | 28 | (28) | ||||||||||||
Net income | 2,277 | 2,074 | 943 | (2,178) | 3,116 | ||||||||||||
Net income attributable to noncontrolling interests | - | (1,026) | 34 | 153 | (839) | ||||||||||||
Net income attributable to Newmont stockholders | $ | 2,277 | $ | 1,048 | $ | 977 | $ | (2,025) | $ | 2,277 | |||||||
(1) | Excludes Amortization and Reclamation and remediation. |
Years Ended December 31, 2009 | |||||||||||||||||
Newmont | |||||||||||||||||
Newmont | Mining | ||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||
Condensed Consolidating Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||
Sales | $ | - | $ | 5,911 | $ | 1,794 | $ | - | $ | 7,705 | |||||||
Costs and expenses | |||||||||||||||||
Costs applicable to sales (1) | - | 2,128 | 903 | (23) | 3,008 | ||||||||||||
Amortization | - | 565 | 242 | (1) | 806 | ||||||||||||
Reclamation and remediation | - | 41 | 18 | - | 59 | ||||||||||||
Exploration | - | 101 | 86 | - | 187 | ||||||||||||
Advanced projects, research and development | - | 66 | 71 | (2) | 135 | ||||||||||||
General and administrative | - | 129 | 4 | 26 | 159 | ||||||||||||
Write-down of property, plant and mine | |||||||||||||||||
development | - | 6 | 1 | - | 7 | ||||||||||||
Other expense, net | 9 | 160 | 189 | - | 358 | ||||||||||||
9 | 3,196 | 1,514 | - | 4,719 | |||||||||||||
Other income (expense) | |||||||||||||||||
Other income, net | (11) | 27 | 72 | - | 88 | ||||||||||||
Interest income - intercompany | 90 | 7 | 5 | (102) | - | ||||||||||||
Interest expense - intercompany | (9) | - | (93) | 102 | - | ||||||||||||
Interest expense, net | (65) | (47) | (8) | - | (120) | ||||||||||||
5 | (13) | (24) | - | (32) | |||||||||||||
Income before income and mining tax and other items | (4) | 2,702 | 256 | - | 2,954 | ||||||||||||
Income and mining tax expense | 1 | (781) | (49) | - | (829) | ||||||||||||
Equity income (loss) of affiliates | 1,316 | 5 | 185 | (1,522) | (16) | ||||||||||||
Income from continuing operations | 1,313 | 1,926 | 392 | (1,522) | 2,109 | ||||||||||||
Income (loss) from discontinued operations | (16) | (16) | - | 16 | (16) | ||||||||||||
Net income | 1,297 | 1,910 | 392 | (1,506) | 2,093 | ||||||||||||
Net income attributable to noncontrolling interests | - | (795) | (77) | 76 | (796) | ||||||||||||
Net income attributable to Newmont stockholders | $ | 1,297 | $ | 1,115 | $ | 315 | $ | (1,430) | $ | 1,297 | |||||||
(1) | Excludes Amortization and Reclamation and remediation. |
Years Ended December 31, 2008 | |||||||||||||||||
Newmont | |||||||||||||||||
Newmont | Mining | ||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||
Condensed Consolidating Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||
Sales | $ | - | $ | 4,638 | $ | 1,486 | $ | - | $ | 6,124 | |||||||
Costs and expenses | |||||||||||||||||
Costs applicable to sales (1) | - | 2,193 | 866 | (21) | 3,038 | ||||||||||||
Amortization | - | 549 | 190 | (1) | 738 | ||||||||||||
Reclamation and remediation | - | 85 | 57 | - | 142 | ||||||||||||
Exploration | - | 131 | 82 | - | 213 | ||||||||||||
Advanced projects, research and development | - | 63 | 107 | (4) | 166 | ||||||||||||
General and administrative | - | 113 | 6 | 25 | 144 | ||||||||||||
Write-down of property, plant and mine | |||||||||||||||||
development | - | 15 | 122 | - | 137 | ||||||||||||
Other expense, net | 1 | 176 | 62 | 1 | 240 | ||||||||||||
1 | 3,325 | 1,492 | - | 4,818 | |||||||||||||
Other income (expense) | |||||||||||||||||
Other income, net | (40) | 112 | 51 | - | 123 | ||||||||||||
Interest income - intercompany | 278 | 24 | - | (302) | - | ||||||||||||
Interest expense - intercompany | (8) | - | (294) | 302 | - | ||||||||||||
Interest expense, net | (74) | (56) | (5) | - | (135) | ||||||||||||
156 | 80 | (248) | - | (12) | |||||||||||||
Income before income and mining tax and other items | 155 | 1,393 | (254) | - | 1,294 | ||||||||||||
Income and mining tax expense | (55) | (132) | 45 | - | (142) | ||||||||||||
Equity income (loss) of affiliates | 718 | 4 | 102 | (829) | (5) | ||||||||||||
Income from continuing operations | 818 | 1,265 | (107) | (829) | 1,147 | ||||||||||||
Income (loss) from discontinued operations | 13 | (6) | 3 | 3 | 13 | ||||||||||||
Net income | 831 | 1,259 | (104) | (826) | 1,160 | ||||||||||||
Net income attributable to noncontrolling interests | - | (347) | 10 | 8 | (329) | ||||||||||||
Net income attributable to Newmont stockholders | $ | 831 | $ | 912 | $ | (94) | $ | (818) | $ | 831 | |||||||
(1) | Excludes Amortization and Reclamation and remediation. |
For the Year Ended December 31, 2010 | ||||||||||||||||||
Newmont | ||||||||||||||||||
Newmont | Mining | |||||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||||
Condensed Consolidating Statement of Cash Flows | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||
Operating activities: | ||||||||||||||||||
Net income | $ | 2,277 | $ | 2,074 | $ | 943 | $ | (2,178) | $ | 3,116 | ||||||||
Adjustments | (600) | 865 | (1,625) | 2,178 | 818 | |||||||||||||
Net change in operating assets and liabilities | (57) | (512) | (185) | - | (754) | |||||||||||||
Net cash provided from (used in) continuing operations | 1,620 | 2,427 | (867) | - | 3,180 | |||||||||||||
Net cash used in discontinued operations | - | (13) | - | - | (13) | |||||||||||||
Net cash provided from (used in) operations | 1,620 | 2,414 | (867) | - | 3,167 | |||||||||||||
Investing activities: | ||||||||||||||||||
Additions to property, plant and mine development | - | (721) | (681) | - | (1,402) | |||||||||||||
Acquisitions, net | - | - | (4) | - | (4) | |||||||||||||
Proceeds from sale of marketable securities | - | - | 3 | - | 3 | |||||||||||||
Purchases of marketable securities | - | (5) | (23) | - | (28) | |||||||||||||
Proceeds from sale of other assets | - | 16 | 40 | - | 56 | |||||||||||||
Other | - | - | (44) | - | (44) | |||||||||||||
Net cash used in investing activities | - | (710) | (709) | - | (1,419) | |||||||||||||
Financing activities: | ||||||||||||||||||
Net repayments | - | (420) | (10) | - | (430) | |||||||||||||
Net intercompany borrowings (repayments) | (1,442) | (152) | 1,730 | (136) | - | |||||||||||||
Proceeds from stock issuance | 60 | - | - | - | 60 | |||||||||||||
Sale of subsidiary shares to noncontrolling interests | - | 229 | - | - | 229 | |||||||||||||
Acquisition of subsidiary shares from noncontrolling | ||||||||||||||||||
interests | - | - | (110) | - | (110) | |||||||||||||
Dividends paid to noncontrolling interests | - | (598) | - | 136 | (462) | |||||||||||||
Dividends paid to common stockholders | (246) | - | - | - | (246) | |||||||||||||
Change in restricted cash and other | - | 46 | (2) | - | 44 | |||||||||||||
Net cash provided from (used in) financing activities | (1,628) | (895) | 1,608 | - | (915) | |||||||||||||
Effect of exchange rate changes on cash | - | 1 | 7 | - | 8 | |||||||||||||
Net change in cash and cash equivalents | (8) | 810 | 39 | - | 841 | |||||||||||||
Cash and cash equivalents at beginning of period | 8 | 3,067 | 140 | - | 3,215 | |||||||||||||
Cash and cash equivalents at end of period | $ | - | $ | 3,877 | $ | 179 | $ | - | $ | 4,056 |
For the Year Ended December 31, 2009 | ||||||||||||||||||
Newmont | ||||||||||||||||||
Newmont | Mining | |||||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||||
Condensed Consolidating Statement of Cash Flows | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||
Operating activities: | ||||||||||||||||||
Net income (loss) | $ | 1,297 | $ | 1,910 | $ | 392 | $ | (1,506) | $ | 2,093 | ||||||||
Adjustments | 75 | 683 | (1,216) | 1,506 | 1,048 | |||||||||||||
Net change in operating assets and liabilities | 135 | (400) | 38 | - | (227) | |||||||||||||
Net cash provided from (used in) continuing operations | 1,507 | 2,193 | (786) | - | 2,914 | |||||||||||||
Net cash provided from discontinued operations | - | 33 | - | - | 33 | |||||||||||||
Net cash provided from (used in) operations | 1,507 | 2,226 | (786) | - | 2,947 | |||||||||||||
Investing activities: | ||||||||||||||||||
Additions to property, plant and mine development | - | (470) | (1,299) | - | (1,769) | |||||||||||||
Acquisitions, net | (8) | (11) | (988) | - | (1,007) | |||||||||||||
Proceeds from sale of marketable securities | - | - | 17 | - | 17 | |||||||||||||
Purchases of marketable securities | - | - | (5) | - | (5) | |||||||||||||
Proceeds from sale of other assets | - | 15 | 3 | - | 18 | |||||||||||||
Other | - | - | (35) | - | (35) | |||||||||||||
Net cash used in investing activities | (8) | (466) | (2,307) | - | (2,781) | |||||||||||||
Financing activities: | ||||||||||||||||||
Net borrowings (repayments) | 1,722 | (154) | - | - | 1,568 | |||||||||||||
Net intercompany borrowings (repayments) | (4,298) | 953 | 3,345 | - | - | |||||||||||||
Proceeds from stock issuance | 1,278 | - | - | - | 1,278 | |||||||||||||
Sale of subsidiary shares to noncontrolling interests | - | 638 | - | - | 638 | |||||||||||||
Acquisition of subsidiary shares from noncontrolling | ||||||||||||||||||
interests | - | - | (287) | - | (287) | |||||||||||||
Dividends paid to noncontrolling interests | - | (391) | (3) | - | (394) | |||||||||||||
Dividends paid to common stockholders | (196) | - | - | - | (196) | |||||||||||||
Change in restricted cash and other | 2 | (48) | 11 | - | (35) | |||||||||||||
Net cash provided from (used in) financing activities of | ||||||||||||||||||
continuing operations | (1,492) | 998 | 3,066 | - | 2,572 | |||||||||||||
Net cash used in financing activities of discontinued | ||||||||||||||||||
operations | - | (2) | - | - | (2) | |||||||||||||
Net cash provided from (used in) financing activities | (1,492) | 996 | 3,066 | - | 2,570 | |||||||||||||
Effect of exchange rate changes on cash | 1 | 1 | 42 | - | 44 | |||||||||||||
Net change in cash and cash equivalents | 8 | 2,757 | 15 | - | 2,780 | |||||||||||||
Cash and cash equivalents at beginning of period | - | 310 | 125 | - | 435 | |||||||||||||
Cash and cash equivalents at end of period | $ | 8 | $ | 3,067 | $ | 140 | $ | - | $ | 3,215 |
For the Year Ended December 31, 2008 | ||||||||||||||||||
Newmont | ||||||||||||||||||
Newmont | Mining | |||||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||||
Condensed Consolidating Statement of Cash Flows | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||
Operating activities: | ||||||||||||||||||
Net income (loss) | $ | 831 | $ | 1,259 | $ | (104) | $ | (826) | $ | 1,160 | ||||||||
Adjustments | 49 | 419 | (430) | 826 | 864 | |||||||||||||
Net change in operating assets and liabilities | 17 | (575) | (69) | - | (627) | |||||||||||||
Net cash provided from (used in) continuing operations | 897 | 1,103 | (603) | - | 1,397 | |||||||||||||
Net cash provided from (used in) discontinued operations | - | (123) | 19 | - | (104) | |||||||||||||
Net cash provided from (used in) operations | 897 | 980 | (584) | - | 1,293 | |||||||||||||
Investing activities: | ||||||||||||||||||
Additions to property, plant and mine development | - | (707) | (1,163) | - | (1,870) | |||||||||||||
Acquisitions, net | - | (7) | (318) | - | (325) | |||||||||||||
Proceeds from sale of marketable securities | - | - | 50 | - | 50 | |||||||||||||
Purchases of marketable securities | - | - | (17) | - | (17) | |||||||||||||
Proceeds from sale of other assets | - | 17 | 35 | - | 52 | |||||||||||||
Other | - | - | (36) | - | (36) | |||||||||||||
Net cash used in investing activities of continuing operations | - | (697) | (1,449) | - | (2,146) | |||||||||||||
Net cash provided from (used in) investing activities of | ||||||||||||||||||
discontinued operations | - | (15) | 4 | - | (11) | |||||||||||||
Net cash used in investing activities | - | (712) | (1,445) | - | (2,157) | |||||||||||||
Financing activities: | ||||||||||||||||||
Net borrowings (repayments) | 757 | (116) | (46) | - | 595 | |||||||||||||
Net intercompany borrowings (repayments) | (1,518) | (287) | 1,805 | - | - | |||||||||||||
Proceeds from stock issuance | 29 | - | - | - | 29 | |||||||||||||
Dividends paid to noncontrolling interests | - | (385) | (4) | - | (389) | |||||||||||||
Dividends paid to common stockholders | (182) | - | - | - | (182) | |||||||||||||
Change in restricted cash and other | 17 | 48 | 9 | - | 74 | |||||||||||||
Net cash provided from (used in) financing activities of | ||||||||||||||||||
continuing operations | (897) | (740) | 1,764 | - | 127 | |||||||||||||
Net cash used in financing activities of discontinued | ||||||||||||||||||
operations | - | (4) | - | - | (4) | |||||||||||||
Net cash provided from (used in) financing activities | (897) | (744) | 1,764 | - | 123 | |||||||||||||
Effect of exchange rate changes on cash | - | (3) | (51) | - | (54) | |||||||||||||
Net change in cash and cash equivalents | - | (479) | (316) | - | (795) | |||||||||||||
Cash and cash equivalents at beginning of period | - | 789 | 441 | - | 1,230 | |||||||||||||
Cash and cash equivalents at end of period | $ | - | $ | 310 | $ | 125 | $ | - | $ | 435 |
At December 31, 2010 | |||||||||||||||||
Newmont | |||||||||||||||||
Newmont | Mining | ||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||
Condensed Consolidating Balance Sheet | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | - | $ | 3,877 | $ | 179 | $ | - | $ | 4,056 | |||||||
Trade receivables | - | 501 | 81 | - | 582 | ||||||||||||
Accounts receivable | 2,222 | 802 | 265 | (3,201) | 88 | ||||||||||||
Investments | - | 72 | 41 | - | 113 | ||||||||||||
Inventories | - | 388 | 270 | - | 658 | ||||||||||||
Stockpiles and ore on leach pads | - | 513 | 104 | - | 617 | ||||||||||||
Deferred income tax assets | - | 170 | 7 | - | 177 | ||||||||||||
Other current assets | - | 77 | 885 | - | 962 | ||||||||||||
Current assets | 2,222 | 6,400 | 1,832 | (3,201) | 7,253 | ||||||||||||
Property, plant and mine development, net | - | 5,364 | 7,562 | (19) | 12,907 | ||||||||||||
Investments | - | 25 | 1,543 | - | 1,568 | ||||||||||||
Investments in subsidiaries | 12,295 | 35 | 1,909 | (14,239) | - | ||||||||||||
Stockpiles and ore on leach pads | - | 1,347 | 410 | - | 1,757 | ||||||||||||
Deferred income tax assets | 638 | 690 | 109 | - | 1,437 | ||||||||||||
Other long-term assets | 2,675 | 496 | 584 | (3,014) | 741 | ||||||||||||
Total assets | $ | 17,830 | $ | 14,357 | $ | 13,949 | $ | (20,473) | $ | 25,663 | |||||||
Liabilities | |||||||||||||||||
Debt | $ | - | $ | 249 | $ | 10 | $ | - | $ | 259 | |||||||
Accounts payable | 355 | 1,269 | 1,996 | (3,193) | 427 | ||||||||||||
Employee-related benefits | - | 222 | 66 | - | 288 | ||||||||||||
Income and mining taxes | 19 | 261 | 75 | - | 355 | ||||||||||||
Other current liabilities | 56 | 373 | 2,959 | (1,970) | 1,418 | ||||||||||||
Current liabilities | 430 | 2,374 | 5,106 | (5,163) | 2,747 | ||||||||||||
Debt | 3,991 | 135 | 56 | - | 4,182 | ||||||||||||
Reclamation and remediation liabilities | - | 676 | 308 | - | 984 | ||||||||||||
Deferred income tax liabilities | - | 513 | 975 | - | 1,488 | ||||||||||||
Employee-related benefits | 5 | 244 | 76 | - | 325 | ||||||||||||
Other long-term liabilities | 375 | 56 | 2,824 | (3,034) | 221 | ||||||||||||
Total liabilities | 4,801 | 3,998 | 9,345 | (8,197) | 9,947 | ||||||||||||
Equity | |||||||||||||||||
Preferred stock | - | - | 61 | (61) | - | ||||||||||||
Common stock | 778 | - | - | - | 778 | ||||||||||||
Additional paid-in capital | 7,963 | 2,722 | 3,894 | (6,300) | 8,279 | ||||||||||||
Accumulated other comprehensive income | 1,108 | (75) | 1,180 | (1,105) | 1,108 | ||||||||||||
Retained earnings | 3,180 | 4,850 | (1,109) | (3,741) | 3,180 | ||||||||||||
Newmont stockholders’ equity | 13,029 | 7,497 | 4,026 | (11,207) | 13,345 | ||||||||||||
Noncontrolling interests | - | 2,862 | 578 | (1,069) | 2,371 | ||||||||||||
Total equity | 13,029 | 10,359 | 4,604 | (12,276) | 15,716 | ||||||||||||
Total liabilities and equity | $ | 17,830 | $ | 14,357 | $ | 13,949 | $ | (20,473) | $ | 25,663 | |||||||
At December 31, 2009 | |||||||||||||||||
Newmont | |||||||||||||||||
Newmont | Mining | ||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||
Condensed Consolidating Balance Sheet | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | 8 | $ | 3,067 | $ | 140 | $ | - | $ | 3,215 | |||||||
Trade receivables | - | 417 | 21 | - | 438 | ||||||||||||
Accounts receivable | 2,338 | 673 | 363 | (3,272) | 102 | ||||||||||||
Investments | - | 4 | 52 | - | 56 | ||||||||||||
Inventories | - | 307 | 186 | - | 493 | ||||||||||||
Stockpiles and ore on leach pads | - | 331 | 72 | - | 403 | ||||||||||||
Deferred income tax assets | - | 157 | 58 | - | 215 | ||||||||||||
Other current assets | - | 78 | 822 | - | 900 | ||||||||||||
Current assets | 2,346 | 5,034 | 1,714 | (3,272) | 5,822 | ||||||||||||
Property, plant and mine development, net | - | 5,195 | 7,193 | (18) | 12,370 | ||||||||||||
Investments | - | 26 | 1,160 | - | 1,186 | ||||||||||||
Investments in subsidiaries | 9,842 | 31 | 1,089 | (10,962) | - | ||||||||||||
Stockpiles and ore on leach pads | - | 1,323 | 179 | - | 1,502 | ||||||||||||
Deferred income tax assets | - | 844 | 93 | - | 937 | ||||||||||||
Other long-term assets | 2,551 | 357 | 419 | (2,845) | 482 | ||||||||||||
Total assets | $ | 14,739 | $ | 12,810 | $ | 11,847 | $ | (17,097) | $ | 22,299 | |||||||
Liabilities | |||||||||||||||||
Debt | $ | - | $ | 147 | $ | 10 | $ | - | $ | 157 | |||||||
Accounts payable | 46 | 1,201 | 2,413 | (3,264) | 396 | ||||||||||||
Employee-related benefits | - | 202 | 48 | - | 250 | ||||||||||||
Income and mining taxes | - | 192 | 8 | - | 200 | ||||||||||||
Other current liabilities | 58 | 281 | 2,949 | (1,971) | 1,317 | ||||||||||||
Current liabilities | 104 | 2,023 | 5,428 | (5,235) | 2,320 | ||||||||||||
Debt | 3,928 | 659 | 65 | - | 4,652 | ||||||||||||
Reclamation and remediation liabilities | - | 565 | 240 | - | 805 | ||||||||||||
Deferred income tax liabilities | 31 | 494 | 816 | - | 1,341 | ||||||||||||
Employee-related benefits | 4 | 324 | 53 | - | 381 | ||||||||||||
Other long-term liabilities | 338 | 75 | 2,637 | (2,863) | 187 | ||||||||||||
Total liabilities | 4,405 | 4,140 | 9,239 | (8,098) | 9,686 | ||||||||||||
Equity | |||||||||||||||||
Preferred stock | - | - | 61 | (61) | - | ||||||||||||
Common stock | 770 | - | - | - | 770 | ||||||||||||
Additional paid-in capital | 7,789 | 2,709 | 3,874 | (6,214) | 8,158 | ||||||||||||
Accumulated other comprehensive income | 626 | (125) | 738 | (613) | 626 | ||||||||||||
Retained earnings | 1,149 | 3,801 | (2,080) | (1,721) | 1,149 | ||||||||||||
Newmont stockholders’ equity | 10,334 | 6,385 | 2,593 | (8,609) | 10,703 | ||||||||||||
Noncontrolling interests | - | 2,285 | 15 | (390) | 1,910 | ||||||||||||
Total equity | 10,334 | 8,670 | 2,608 | (8,999) | 12,613 | ||||||||||||
Total liabilities and equity | $ | 14,739 | $ | 12,810 | $ | 11,847 | $ | (17,097) | $ | 22,299 | |||||||
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NOTE 32 UNAUDITED SUPPLEMENTARY DATA | ||||||||||||||
Quarterly Data | ||||||||||||||
The following is a summary of selected quarterly financial information (unaudited): | ||||||||||||||
2010 | ||||||||||||||
Three Months Ended | ||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||
Sales | $ | 2,242 | $ | 2,153 | $ | 2,597 | $ | 2,548 | ||||||
(1) | $ | 1,135 | $ | 1,062 | $ | 1,447 | $ | 1,402 | ||||||
(2) | $ | 546 | $ | 382 | $ | 537 | $ | 840 | ||||||
Income (loss) from discontinued operations(2) | - | - | - | (28) | ||||||||||
(2) | $ | 546 | $ | 382 | $ | 537 | $ | 812 | ||||||
Income per common share | ||||||||||||||
Basic: | ||||||||||||||
Continuing operations | $ | 1.11 | $ | 0.78 | $ | 1.09 | $ | 1.71 | ||||||
Discontinued operations | - | - | - | (0.06) | ||||||||||
$ | 1.11 | $ | 0.78 | $ | 1.09 | $ | 1.65 | |||||||
Diluted: | ||||||||||||||
Continuing operations | $ | 1.11 | $ | 0.77 | $ | 1.07 | $ | 1.67 | ||||||
Discontinued operations | - | - | - | (0.06) | ||||||||||
$ | 1.11 | $ | 0.77 | $ | 1.07 | $ | 1.61 | |||||||
Weighted average common shares (millions) | ||||||||||||||
Basic | 491 | 492 | 493 | 493 | ||||||||||
Diluted | 493 | 499 | 502 | 504 | ||||||||||
Cash dividends declared per common share | $ | 0.10 | $ | 0.10 | $ | 0.15 | $ | 0.15 | ||||||
Closing price of common stock | $ | 50.93 | $ | 61.74 | $ | 62.81 | $ | 61.43 | ||||||
2009 | ||||||||||||||
Three Months Ended | ||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||
Sales | $ | 1,536 | $ | 1,602 | $ | 2,049 | $ | 2,518 | ||||||
(1) | $ | 606 | $ | 726 | $ | 1,083 | $ | 1,417 | ||||||
(2) | $ | 189 | $ | 171 | $ | 388 | $ | 560 | ||||||
Income (loss) from discontinued operations(2) | - | (9) | - | (2) | ||||||||||
(2) | $ | 189 | $ | 162 | $ | 388 | $ | 558 | ||||||
Income per common share | ||||||||||||||
Basic: | ||||||||||||||
Continuing operations | $ | 0.40 | $ | 0.35 | $ | 0.79 | $ | 1.14 | ||||||
Discontinued operations | - | (0.02) | - | - | ||||||||||
$ | 0.40 | $ | 0.33 | $ | 0.79 | $ | 1.14 | |||||||
Diluted: | ||||||||||||||
Continuing operations | $ | 0.40 | $ | 0.35 | $ | 0.79 | $ | 1.13 | ||||||
Discontinued operations | - | (0.02) | - | - | ||||||||||
$ | 0.40 | $ | 0.33 | $ | 0.79 | $ | 1.13 | |||||||
Weighted average common shares (millions) | ||||||||||||||
Basic | 472 | 490 | 490 | 491 | ||||||||||
Diluted | 473 | 491 | 491 | 493 | ||||||||||
Cash dividends declared per common share | $ | 0.10 | $ | 0.10 | $ | 0.10 | $ | 0.10 | ||||||
Closing price of common stock | $ | 44.76 | $ | 40.87 | $ | 44.02 | $ | 47.31 |
(1) Sales less Costs applicable to sales, Amortization and Reclamation and remediation.
(2) Attributable to Newmont stockholders.
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